Wipeout: GameStop’s Bitcoin plan triggers $3B loss
Folks watching the markets saw GameStop’s value take a nosedive on March 27, with the video game retailer losing almost $3 billion in market cap. The reason? Investors started to have second thoughts about GameStop’s plan to dive into Bitcoin.
, in case you’re keeping score, according to Google Finance.
Just the day before, on March 26, GameStop had announced their intention to use the cash from a $1.3 billion convertible debt offering to buy Bitcoin. This move is becoming a trend for public companies wanting to give their stock price a little boost.
GameStop’s Bitcoin announcement followed hot on the heels of a previous statement where they mentioned plans to build up a reserve of cryptocurrencies, including Bitcoin and stablecoins pegged to the US dollar.
Initially, investors seemed to like the idea, and GameStop shares jumped 12% on March 26. But that good feeling didn’t last. By March 27, investor sentiment flipped, sending GameStop’s stock, GME, plummeting nearly 24%, reports Google Finance.
GameStop’s stock lost its gains on March 27. Source: Google Finance
Related: GameStop buying Bitcoin would ‘bake the noodles’ of TradFi: Swan exec
Cold Feet?
Market watchers suggest this less-than-enthusiastic response might be because people are worried GameStop is trying to distract from some fundamental issues with their core business.
Bret Kenwell, a US investment analyst at eToro, explained to Reuters on March 27, “Investors aren’t necessarily feeling super confident about the business itself.”
He added, “There are definitely question marks hanging over GameStop’s business model. If Bitcoin is going to be the new direction, what happens to everything else?”
This sell-off also underscores a more cautious view investors are taking on Bitcoin right now. Ongoing global economic uncertainties, like trade tensions, are putting pressure on the cryptocurrency’s price.
Bitcoin has dipped about 7% since the start of the year, trading around $87,000 as of March 27, according to Google Finance.
Agne Linge, head of growth at decentralized finance (DeFi) protocol WeFi, noted to Cointelegraph that Bitcoin’s “price briefly popped up to $89,000 but has since changed course.”
Linge also pointed out that trade wars, especially those sparked by US President Donald Trump’s tariffs, are still a concern for traders in the market.
Publicly traded companies are some of the biggest holders of Bitcoin. Source: BitcoinTreasuries.NET
Bitcoin on the Balance Sheet
GameStop is joining the Bitcoin corporate treasury trend a bit later than some others. It’s becoming more common for companies to hold Bitcoin as part of their assets.
Take 2024, for example. As Bitcoin’s value climbed, shares of Strategy shot up by over 350%, based on FinanceCharts data.
Strategy, founded by Michael Saylor, has been a big believer in Bitcoin, investing over $30 billion in BTC since they were early adopters of corporate Bitcoin strategies back in 2020, according to BitcoinTreasuries.NET.NET data.
Strategy’s success paved the way, and now many other companies are building their own Bitcoin treasuries. As of March 27, public companies collectively are holding nearly $58 billion in Bitcoin, data reveals.
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