Citron Research, a prominent bearish trader, has decided to exit its short position on GameStop, citing the company's recent cash infusion. Despite this, the researcher believes that GameStop's financials are deteriorating and its success is largely driven by hype.

The decision to cut losses comes as Citron Research acknowledges the market's irrationality, drawing parallels with the massive valuation of Dogecoin, a popular meme coin. The researcher maintains a bearish outlook on GameStop, justifying its initial short position.

However, the potential for another retail investor-driven rally, similar to those seen in meme coin booms, has prompted Citron to exit its short position. This move has led to a drop in GameStop shares, which in turn has caused a decline in the value of several top meme coins, including PEPE, FLOKI, and ROAR.

Meme Coins Plummet After GME Shares Fall

The value of most meme coins has plummeted over the past week, with ROAR, a popular meme coin, experiencing a 30% decline in the previous week and remaining in the red over the last day. This decline comes just days after a highly anticipated live stream by Keith Gill, also known as "Roaring Kitty," failed to deliver any substantial news.

It remains to be seen whether meme coins will recover from their contraction. Some analysts believe that the failure of the United States Securities and Exchange Commission (SEC) to take action against "Roaring Kitty" could catalyze demand, reviving a new altcoin season. If this happens, meme coins could recover and track higher, lifting their total market cap above the $60 billion mark. The recent plunge has shaved over $8 billion off the total meme market cap.