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3 reasons for the decline in the price of GameStop coin (GME)

I blinked GameStop Coin (GME), a meme coin built on the Solana network, rose significantly today after seeing a significant increase of over 1,600% over the past few days. This height Attract the attention of traders and investors On the digital currency market.

The price of this currency, which had fallen into oblivion just a few days ago, reached its highest level ever, and the daily trading volume increased by 374.48%.

However, it appears the party is over, as GME's value has fallen by over 45% in the past day. His market value decreased 37.3% to $68.7 million, dropping his ranking from 395 to 525 according to Data CoinMarketCap website.

GameStop Coin Price Chart (GME)
GameStop Coin Price Chart (GME)

The daily trading volume also decreased by 374.48%, 3%, to $191.6 million. This high trading volume relative to market capitalization, 277.15%, highlights excessive trading activity relative to its value.

Let's review the reasons for this sudden drop in... GameStop Coin Prices.

Pumping and Dumping Problems “Pump and Dump”

Speculation that Gamestop (GME) may be part of a pump and dump scam may have driven its price lower recently for a number of reasons. First, investor distrust arises when talk of a potential scam pushes investors to sell their holdings to avoid potential losses.

This fear-driven behavior triggers a self-fulfilling prophecy, causing the price to fall. Market panic ensues, as other traders engage in panic selling, and the wheel of decline begins to turn.

The currency loses much of its value and investor interest declines, causing the price to fall further.

The noise has calmed down

The first price rise was originally caused by purely psychological and speculative factors. And it is not for objective and measurable reasons that it is natural that this does not last long.

Once the mood calms down and the “momentary” buying pressure subsides, the price drops quickly.

This rise was the result of a simple tweet from famous trader Keith Gill, known as “Roaring Kitty”, after an absence of more than 3 years, which sparked widespread interest among traders.

The latter was the leader of a campaign that brought together traders on the Reddit platform in 2021, at the height of the Corona pandemic, to buy and support GameStop shares against hedge funds who were betting on a fall in stock prices. actions. This sudden support led to a rise GameStop stock price More than 1000% in less than a month.

However, the failure to follow up on this tweet with action led to a decrease in the intensity of the hype and the disappearance of hopes for a similar new campaign. Which led to a drop in prices.

Profit-taking operations

Finally, it is normal for there to be profit taking after a four-digit increase. In all similar price movements, there is a sharp rise in prices in a short time. The next natural movement is a decline with the same intensity, without there necessarily being a pump and dump process. Any sane person will reap their benefits quickly after reaching levels they never dreamed of.

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Elhadi Bouazizi

Hedi Bouazizi has been a professional trader for 15 years in the Forex and Cryptocurrencies sectors. Hadi graduated from the Faculty of Engineering, but specialized in the field of digital economy and trade, and has been professionally writing economic content and technical and fundamental analysis for a long time. Al-Hadi also helps enrich Arabic educational content related to cryptocurrencies and blockchain in many global centers and financial markets.




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