Crypto Market Keeping a Close Eye on GameStop Movements
On March 27th, the New York Stock Exchange (NYSE) imposed a Short Sale Restriction (SSR) on GameStop’s stock. Its short selling volume reached 30.85 million shares, a 234% surge within a 24-hour period. This level is close to historical records set during the famous January 2021 “short squeeze.”
According to analysts, this high level of short selling is statistically only possible through “naked short selling” practices, where sellers did not actually borrow the shares before selling them. This triggered the activation of the SSR mechanism, limiting short sales for the rest of the day and the following day.
Persistent Doubts Surrounding GameStop’s Crypto Ambitions
Although GameStop announced an investment plan in Bitcoin, this decision has been met with skepticism by some observers. Tastylive founder Tom Sosnoff has deemed this move “a bit comical.” He suggested that GameStop is looking to diversify into cryptocurrencies due to a lack of other growth opportunities.
Similarly, analyst Bret Kenwell from eToro believes that investors are not optimistic about the company’s prospects. The issuance of a $1.3 billion convertible bond intended to partially fund the purchase of Bitcoin has also been viewed as a sign of weakness by some.
Despite its crypto ambitions, GameStop faces numerous challenges in convincing investors of the relevance of its business model. The recent episodes of high volatility in its stock, coupled with this new record of short sales, highlight the fragility of the situation. The crypto sector will closely monitor the upcoming developments of GameStop. The company seems eager to capitalize on the cryptocurrency trend to try and revive its business.
