- GameStop will buy Bitcoin after weeks of speculation.
- 170 public entities have Bitcoin reserves.
- Many companies that have recently begun buying Bitcoin are underwater on their investments.
GameStop shares jumped over 14% over the past 24 hours after the company’s board approved a plan to buy Bitcoin.
The video game retailer and meme stock darling has $4.8 billion in cash reserves, but it’s unclear how much it wants to allocate to the number one cryptocurrency.
While the announcement has caused a stock price uptick, some market observers say it’s a double-edged sword.
“In the short term, this has already acted as a positive decision, as reflected in the company’s stock growth, however, it also carries risks of volatility,” analysts at crypto business payment company B2BINPay told DL News.
“Stablecoins, of course, won’t carry those risks, but Bitcoin can go both ways ― offering potential for growth but also for a drop.”
Bitcoin dropped on Wednesday, to $86,858 in afternoon trading UK time, and is still almost 20% off its January peak.
Still, the move would put GameStop in the swelling company of public firms that have added Bitcoin to their corporate balance sheets ― most famously Strategy, formerly MicroStrategy, which holds the largest Bitcoin hoard worth more than $44 billion.
Championed by its laser-eyed founder Michael Saylor, Strategy’s Bitcoin bet has turned the software company into a de facto Bitcoin exchange-traded fund.
Bitcoin adoption has been a stock booster for some companies.
Strategy’s stock price has soared 84% in the last 12 months, and it’s up 23-fold since it began acquiring Bitcoin in 2020.
The shares of Metaplanet, a Japanese investment firm, have skyrocketed 1,600% since it started buying Bitcoin last April.
But not every Strategy copycat has done so well. The swoon in Bitcoin’s price in the first quarter, along with stocks and other cryptocurrencies, has punished newer entrants to the Bitcoin treasury play with significant losses.
If Strategy is any guide, GameStop might need its own Bitcoin-maxi. CEO Ryan Cohen was seen with Saylor last month, which stoked speculations that GameStop could join the 170 entities with Bitcoin treasuries.
Matt Cole, CEO of asset management firm Strive Asset Management, also urged Cohen in an open letter to convert some of GameStop’s cash holdings into Bitcoin ― to which Cohen responded, “Letter received.”
Co-founded by entrepreneur and Donald Trump ally Vivek Ramaswamy, Strive filed for a Bitcoin Bond ETF earlier in the year. The proposed ETF invests in bonds that are issued by public companies with Bitcoin treasury holdings.
Crypto market movers
- Bitcoin is down 1.1% in the past 24 hours to trade at $86,858.
- Ethereum is down 2.5% to trade at $2,018.
What we’re reading
- Bettors seize on US group chat scandal — here are chances Hegseth, Waltz get ousted ― DL News
- Institutions are getting serious about crypto — Milk Road
- Coinbase Aims to Jointly Pass Market Structure and Stablecoin Legislation in Congress ― Unchained
- What to look out for this week — Milk Road
- Trump Media’s ETF deal with Crypto.com sparks controversy over $7bn in tokens ― DL News
- What to look out for this week — Milk Road
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. Got a tip? please contact him at osato@dlnews.com.
