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Dead squirrels don’t usually feature in financial history. But we don’t live in “normal” times right now. Far from it.
A month ago, America’s online Maga crowd exploded on social media after New York state health officials euthanized a pet squirrel named Peanut suspected of carrying rabies. Ta.
Peanuts was already famous on the internet, so Elon Musk blamed it for its death. “The government can break into your home…take your pets and execute them,” he declared.
Then, as viral outrage spread, the price of the meme coin (digital asset) named after the squirrel soared from $0.1 to $2.27 in a matter of days, pushing its market cap to more than $2 billion.
This makes the so-called PNUT coin the fastest-growing meme coin on record, even surpassing Mr. Musk’s beloved Dogecoin. And not just PNUT. Amid the election of President Donald Trump, many other meme coins are also surging. These include MOO DENG (named after the pygmy hippopotamus), 888 (reflecting the Chinese symbol of good luck), POPCAT, dogwifhat, and CHILLGUY (linked to a relaxing cartoon dog meme going viral on TikTok). ) is included.
What will future financial historians make of this? One way to frame this is that President Trump’s election opens the door for digital assets to become more mainstream. This week, Bitcoin’s price breached the $100,000 mark for the first time after President Trump nominated Paul Atkins to head the U.S. Securities and Exchange Commission. Atkins is known as a laissez-faire cryptocurrency advocate, unlike current chairman Gary Gensler.
The second explanation is that the rise of the PNUT and its ilk was due to the fact that our financial system was (still) awash with liquidity and, to cite an iconic example from the 19th century, “extraordinary popular delusion and mob violence.” It shows that he is trapped in a state of “madness.” Charles McKay’s book.
After all, even cryptocurrency enthusiasts admit that meme coins have little practical use or fundamental value. Rather, their prices reflect their ability to act like a profitable “cult”, “giving people families”. . . It’s about identity, community and friendship,” says Murad Makhmudov, a cryptocurrency enthusiast with a large presence on the internet. Traditional investors may be shocked.
But there is a third, more existential way to interpret this story. It shows how the information ecosystem is changing in the financial sector as well as in politics. Most notably, the explosive rise of social media is already changing the way politics and democracy work. We are now seeing how it can move asset prices, both in digital assets and potentially other sectors.
One sign of this came three years ago, when the stock prices of companies like GameStop and AMC soared amid widespread internet buzz. Another sign was seen this year when GameStop soared again and the meme stock boom hit mainstream companies like Palantir.
This trend will probably become even stronger under the next US administration. After all, the Trump campaign won the U.S. election on the condition of free speech mandates to oppose “censorship,” i.e., to suppress the flow of information, no matter how sinister or organized. I did it. And his victory sparked an outpouring of animal spirits in the market, with many investors now obsessed with fomo.
Additionally, if Atkins is confirmed as SEC Commissioner, he is likely to adopt an ethos of guarding against market rumors rather than imposing additional investor protections. Never mind that there is growing evidence that some of the viral chatter is being orchestrated or driven by AI bots. For example, if Mr. Musk writes a social media post about DOGE, PNUT, or Tesla that moves prices, don’t expect anyone to suppress it.
So what can regular investors do, other than stick with boring mainstream stocks? The only sensible response is to start perusing those streams of information instead of simply ignoring them or dismissing them as Gen Z antics.
This is not easy to track. However, major hedge funds are increasingly leveraging digital analytics to measure changes in online sentiment. Companies such as Bloomberg are also developing tools for social monitoring.
Another notable sign of changing times is the entry of entrepreneurs. As an example, consider a group founded by cyber analysts called Naravanth. The founders told me that while they previously primarily tracked political digital misinformation from countries such as China, they are now seeing increased viral noise around certain stocks to retailers and institutions. He said he has developed a product called Chatterflow that informs investor users.
This has already helped predict recent price movements for companies such as Bright Minds Biosciences, and they say they hope to move into digital assets in the future. Other startups will no doubt emerge.
The good news is that innovations like this show that free market forces can sometimes help address market failures. The bad news is that the potential for market manipulation remains large.
In any case, their takeaway is that the Internet is reshaping not only politics but also financial markets, and both trends will intensify over the next four years. Investors and regulators should take note. These squirrel memes are more than just jokes.
gillian.tett@ft.com
