GameStop's Bitcoin Plan Sparks 16% Surge, 26% Crash
2min read GameStop's recent announcement of its plan to buy Bitcoin has had a significant impact on its stock price, causing it to surge by 16% before crashing by 26% within a few days. This volatility has led to mixed sentiments among analysts, with some predicting a further crash and others hinting at the possibility of a short squeeze, similar to the one that occurred in 2021, which resulted in the stock price reaching its all-time high.
The announcement of GameStop's plan to raise $1.3 billion to buy Bitcoin initially caused a significant uptrend for the token, which rose to a high of $29.39. However, the stock price has since dropped to $21.73, indicating a shift in investor sentiment. The short trader’s volume has increased significantly, with a 234% increase in the last 24 hours, reaching 30,884,606. This high count has led to a trading restriction on the gme stock by the NYSE, affecting its price.
The high short volume indicates that traders are betting on a further drop in the gamestop stock price. However, some investors believe that the stock will follow the price rally of mstr, a company that has seen its stock price surge due to its Bitcoin holdings. If the trend changes and the GME stock price surges, it could result in the liquidation of these shorts, causing short sellers to re-buy GME to restore their losses. This could potentially generate a short squeeze, resulting in a sharp rise in the stock's price.
In 2021, a similar scenario occurred when the short volume was high, and the chain reaction resulted in the price jumping to an all-time high of $82.25. If history repeats itself and a high buying pressure builds, a short squeeze could form, resulting in the GameStop stock’s price rally to new all-time highs. Analysts have noted that the short volume on the monthly chart is higher than during the 2021 short squeeze, adding to the uncertainty surrounding the stock's future price movements.
Some experts, such as Peter Schiff, have criticized GameStop's Bitcoin buying choices, suggesting that the announcement is a distraction from the company's decaying finances. However, others anticipate a comeback similar to the stock price rallies seen with Metaplanet and MicroStrategy. Metaplanet became Japan’s hottest stock due to Bitcoin buying, as its price surged 3.575% within a year. Similarly, Michael Saylor’s MSTR has seen its stock price surge due to its Bitcoin holdings, leading some investors to anticipate that the GME stock price could hit $1000 or higher under the pretext of a short squeeze.
Ask Aime: What do analysts predict will happen to GameStop's stock price after its Bitcoin buying announcement?
According to analysts' forecasts, the most realistic scenario is based on the Bitcoin price rally. If Bitcoin reaches $150,000, the GameStop stock price could mirror it, pushing it to $40 or higher. As this digital asset is the key metric here, investors must monitor Bitcoin’s performance, GameStop BTC buying, and similar updates. The high short volume and the potential for a short squeeze add to the uncertainty surrounding the stock's future price movements, making it a volatile and unpredictable investment.
