Bitcoin Surges Today on Speculation Meme Mania Is Back

It’s been an incredible day for high-risk assets; Speculators have largely retreated into various meme stocks and cryptocurrencies today. For Bitcoin (CRYPTO: BTC), a 2.5% 24-hour move might seem like small potatoes given what’s happening in the market today. GameStop (NYSE: GME) shares are up more than 70% this afternoon; Reddit (NYSE: RDDT) also saw its stock price rise nearly 10% as Keith Kill (“Roaring Kitty”) returned to social media. The meme craze we all thought was dead may now be on hiatus.

We’ll see. The post, which sent speculators back into the market, shows a man leaning forward in his chair; many are speculating that this could mean Roaring Kitty is considering (or already has) adding a position. The timing of the previous move, which is consistent with speculative swings in other high-risk assets such as cryptocurrencies in GameStop, could mean that the right catalysts are now in place to create a surge in demand for these assets and push prices even higher in the near term.

Let’s look at what we should understand from this news and another important catalyst for Bitcoin that many people are now paying close attention to.

Meme craze is a big deal for speculators

Considering this news, Bitcoin’s daily movement is actually quite regular and much quieter than many think. The thing is, Bitcoin’s status as a store of value and a hedge for big money managers means that these headlines don’t mean much to those with the capital to move the price of this token.

It is also true that, given Bitcoin’s size and current market capitalization, larger amounts of capital would need to flow into this token to see the appreciation that many expect to see in the world’s largest cryptocurrency. However, $1 million Bitcoin calls are now surging, and Jack Dorsey is among the top executives ringing the number. Block’s (NYSE: SQ) recent announcement that it will use approximately 10% of the company’s cash flow each month to purchase Bitcoin has provided another demand catalyst for Bitcoin, with investors clearly on board.

The question now is whether this increased demand from retail investors and speculators, combined with already strong demand from corporations and institutional investors, will be enough to spur the next rally in Bitcoin into the six- or seven-figure range.

It’s a game of supply and demand

I definitely think Bitcoin is past the speculation stage. Those betting on the rise to a price target of, say, $1 million will likely take the view that it will be a long and difficult road to get to that level. Of course, historically speaking, this was not the case. If history turns out to be our guide once again (in terms of post-halving moves), there are plenty of reasons to believe Bitcoin could excel in the near term. But I think it’s also becoming increasingly clear that any asset growth into the trillions of dollars in market capitalization will require a very rapid increase in demand.

The story continues

New supply of Bitcoin has become increasingly limited, and there are certainly retail, institutional and institutional investors who have reason to continue adding to Bitcoin at this point in the cycle. However, I think it will be important for investors to take a sensible approach to adding to this token over time. Dollar cost averaging of such assets over time, as Block manager Dorsey expects to do, may be the best course of action.

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Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Block. The Motley Fool has a disclosure policy.

Bitcoin Soars Today on Speculation Meme Mania is Back Originally published by The Motley Fool