GameStop, the game retailer, announced today that it had purchased 4,710 bitcoins, valued at approximately $513 million at current prices. This was the first time the company had purchased bitcoin. Despite a 9 per cent decline in the GameStop stock price, it increased by 15 per cent during the month.
Companies compete for bitcoin.
This move by GameStop is part of a growing competition for bitcoin. The brinkmanship initially initiated by Michael Saylor ' s company Strategy has evolved into an institutional trend, with companies buying to lock in bitcoin. Much of this optimism is based on Donald Trump ' s commitment to creating a more friendly and encrypted monetary ecosystem in the United States.
However, the trend in bitcoin reserves may be overheating. Macroanalyst Noelle Acheson, in her newsletter Crypto Is Macro Now, stated that “a company that imitates Saylor is concerned because it is clearly not a risk-free investment, especially for those entering the market at higher bitcoin prices”.
GameStop Strategic Planning
GameStop today is part of its larger strategy. At the end of March, GameStop announced plans to raise $1.5 billion through convertible bond issues, some of which would be used for such purposes as the acquisition of bitcoin. This form of debt gives GameStop some flexibility to raise funds quickly without immediately diluting shareholders ' interests and gives creditors the option to change shares in the future.
Japan ' s Metaplanet Success Case
Metaplanet in Japan is another company that has achieved significant stock increases through a bitcoin reserve strategy. During the month, Metaplanet stock prices rose by 233 per cent, holding 7,800 bitcoin, valued at approximately $850 million. Strategy, formerly MicroStrategy, holds more than 576,000 bitcoins worth more than $63 billion. Since the accumulation of bitcoin in 2020, its share price has risen more than tenfold.
Short-sale?
However, the Bitcoin reserve does not guarantee long-term stock increases. The bloated market value exceeds the actual bitcoin value held, meaning that investors pay a high premium for indirect contact with bitcoin. The short seller began to discover this opportunity. According to 10x Research data, Metaplanet's share price, for example, implied a bitcoin price of about $596,154, about five times the $108,000 in market prices of bitcoin. “Is it time to sell short?” 10xResearch wrote in a report published on 27 May, “The signals we now see are very similar to the critical turning points of the past.”