A Solana ($SOL) trader haas manage to turn around $53,500 into over $2.8 million over the course of five months and is currently siting on these unrealized gains over a speculative bet on a memecoin mirroring the current meme stock trend surrounding GameStop (GME).
According to data provided by Lookonchain, a memecoin inspired in the ongoing meme stock frenzy trading under the ticker $GME has seen its price explode over the last few weeks, allowing for the trader who bet heavily on it to now sit on 52x gains after buying 90.23 million $GME tokens.
As the price of $GME rises, this diamond hand has made more than $2.8M on $GME, a gain of 52x!He spent only $53.5K to buy 90.23M $GME on Jan 29 and Apr 3, then held it until now, which is currently worth $2.86M!https://t.co/NBZbSXiZLr pic.twitter.com/f7QFhvZukq
— Lookonchain (@lookonchain) June 7, 2024
The cryptocurrency investors has accumulated $GME tokens since the beginning of the year and hasn’t yet sold them, instead adding to their position when the price of the memecoin dropped.
On Solana-based decentralized cryptocurrency exchange Raydium, the tokens are now trading at $0.031 each, up from being nearly worthless when the trader accumulated them, and has somewhat limited liquidity which means the trader could suffer slippage losses when cashing out.
As CryptoGlobe reported, another cryptocurrency trader last month sold their $GME position for a loss of over $122,000 after capitulating. Data shows that the trader spent 1,668 SOL tokens withdrawn from popular cryptocurrency exchange KuCoin to buy $GME, but then exited their position for just 465.7 SOL tokens, realizing a loss of 1,202 SOL.
These gains and losses are driven by the speculative nature of memecoins, which unlike traditional investments aren’t tied to the performance of an underlying company or market, but are seen as instead being tied to their respective communities.
To some analysts, memecoins are just driven by online buzz and social media trends and align with the greater fool theory of investing, wherein profits are made by buying assets in the hopes of selling them to a “greater fool” that’s willing to buy them later on at a higher price.
The cryptocurrency space, itself, has been associated with the greater fools theory in the past, with Neel Kashkari, who took office as president and CEO of the Federal Reserve Bank of Minneapolis on 1 Jan 2016, saying it’s “just a tool of speculation & greater fools.“
This was not the first time that Kashkari has come across as a crypto skeptic. Back in August 2021, while speaking at the Pacific NorthWest Economic Region (PNWER) annual summit held in Montana he said that he was less optimistic about Bitcoin compared to five or six years ago. Rather than sparking financial innovation, Kashkari said the current landscape of crypto is comprised of “95% fraud, hype, noise and confusion.”
Featured image via Pixabay.