GameStop stocks surged in pre-market trading on Friday following the announcement that Keith Gill, also known as “Roaring Kitty,” is making a comeback on YouTube after a three-year halt. However, the latest GameStop earning news and the rising bearish sentiment in the meme coin market might create a crash for the Solana meme coin GameStop.
GameStop’s Large Share Sale Could Dilute Meme Coin Value
GameStop announced a drop in quarterly sales and unexpectedly said it would sell up to 75 million shares on Friday, just before a highly awaited livestream by meme stock influencer Keith Gill.
The shares of the struggling video game retailer, which reported its results four days early, dropped nearly 22% to $36 and were then paused due to volatility. Gill, known to traders as “Roaring Kitty” and famous for sparking a major rally in GameStop shares in 2021, announced a livestream scheduled for 12 pm ET on YouTube.
Also read: GameStop Frenzy 2.0: Meme Coins EXPLODE as Roaring Kitty Returns!
This isn’t the first time GME has capitalized on Gill’s short squeeze tactics. Last month, GME sold 45 million shares, which weakened the initial rally triggered by Gill’s simple posting of a meme.
Gill still holds 5 million shares of GME stock and 120,000 call options that are set to expire on June 21, with a strike price of $20, according to his screenshots.
According to our analysis, we might soon see a massive crash in the GME price as it faces heavy decline in the last few hours. Investors in GME meme coins should be wary of the “sell-the-news” effect after Gill finishes his YouTube livestream.
Read more: GameStop (GME) The Solana Memecoin Hits New All-Time High, Is It Good To Buy GME Now?
The “sell-the-news” effect occurs when prices rise before a major event and then fall sharply afterward. This happens because investors buy ahead of expected good news and sell their shares quickly after the event to secure profits, resulting in a sudden drop in price.
A clear example is when Dogecoin (DOGE) dropped by 25% just minutes after Elon Musk, a major supporter, talked about it on “Saturday Night Live” in May 2021.
What’s Next For GME Price?
GME price made a robust comeback as it surged from the low of $0.01 to new ATH of $0.032. However, over the last few hours the price of GME has been dropping below immediate Fib channels, strengthening bearish dominance. As of writing, GME price trades at $0.021, surging over 67% in the last 24 hours.
The 20-day exponential moving average (EMA) at $0.022 is on a slight downward trajectory, and the relative strength index (RSI) is dropping below the midline, signaling that sellers have the upper hand. The GME/USDT trading pair might decline to its breakout point of $0.013 to test buyers’ patience.
However, this bearish outlook could be negated if the price rebounds and surges above the EMA20 trend line. Under such circumstances, the pair might gain the $0.032 mark and aim for a new ATH.
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