From crypto to meme stocks, the rally is looking a lot like the market's pandemic-era frenzy

• From stocks to crypto, markets look a lot like they did during the pandemic boom.
• Bitcoin's rise is lifting the broader crypto market, while meme stocks popped this week.
• Risk appetite is high and the bears are in retreat as the dizzying stock rally continues.

Roaring Kitty pumping GameStop, newly minted meme coins soaring and crashing in a day, and bitcoin going parabolic. It sounds a lot like 2021, but that was all just this week.

Stock and crypto markets are soaring as investors head into the final stretch of 2024, and the exuberance is reminiscent of the pandemic boom.

Exhibit A is crypto. Bitcoin gained about 60% in 2021. In 2024, it's up 135% with three weeks to go in the year. Most recently the rally has been fueled by excitement for Donald Trump's second term, which is shaping up to be decidedly pro-crypto. This week, he nominated a pro-crypto SEC chief and named a "crypto czar" to guide policy.

The apex token hit $100,000 for the first time on Wednesday, and crypto trading topped $10 trillion in November, an all-time record.

It's not just bitcoin. The total crypto market cap is approaching $4 trillion as altcoins like solana and XRP soar even more than bitcoin in the last week.

Meanwhile, meme coins are making headlines again. The Hawk Tuah meme coin associated with social media influencer Hailey Welch plunged more than 90% shortly after it was issued on December 4, CoinMarketCap data shows. It briefly held a market cap of almost $500 million.

Speaking of memes, Keith Gill, aka Roaring Kitty, resurfaced this week, sending GameStop shares jumping after he posted a picture of a Time magazine cover on X. The picture featured a computer with a video playback bar showing the timestamp 1:09/4:20, aka 69/420, a popular meme among the retail trader cohort. GameStop shares rose as much as 12% after the post before dipping back down on Friday.

Finally, there's the broader stock market. The S&P 500 is up almost 28% this year, on par with 2021's gain and heading for its second consecutive year of returns over 25%.

The endless rally and the enduring strength of the economy have sent some of the most vocal stock bears into hibernation. Few bears remain among the big banks, with JPMorgan being the latest to abandon its bearish call and turn bullish for 2025, predicting an 8% jump for the benchmark index.

Meanwhile, forecasters like "Dr. Doom" Nouriel Roubini and top economist David Rosenberg have adjusted their views recently after calling for a recession or a painful market decline.

This week, Rosenberg, who has been predicting a recession and a "mega-bubble" in stocks, recalibrated his outlook.

"It's high time for me to stop pontificating on all the reasons why the US stock market is crazily overvalued and all the reasons to be bearish based on all the variables I have relied on in the past — from valuation, to sentiment, to overcrowded positioning," the Rosenberg Research founder wrote. "This is not about throwing in the towel as much as trying to get a grip on what is going beyond just calling this a 'bubble' every single day. There must be more than that to what we have been seeing over the past two-plus years."

While 2021 was followed by a painful bear market in 2022, there are important differences to note as investors sprint to year-end.

Perhaps most importantly, 2022 was marked by rising interest rates, which hurt stocks and risk assets like crypto as the Fed fought inflation. The trend now is the opposite, with markets eyeing lower rates and a strong economy heading into the new year.