Fun

GameStop (GME) Down Bad After Bitcoin News — Here’s The Catch

News Feed - 2025-03-29 06:03:46

Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and publishing How Our News is Made Strict editorial policy that focuses on accuracy, relevance, and impartiality Ad discliamer Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio. Este artículo también está disponible en español.


GameStop (NYSE: GME) suffered a sharp 25% drop yesterday, a sudden downturn that followed a 16% rally on March 26. The catalyst? A bold decision by the gaming retailer’s board to establish a Bitcoin treasury—joining the ranks of MicroStrategy, Metaplanet, and other corporations. Initially, the news sent GME shares soaring, as investors viewed the move as a bullish signal. However, the stock quickly reversed course and now finds itself in turbulent waters.


Investor optimism over GameStop’s Bitcoin play was palpable at first. The announcement sparked excitement similar to when MicroStrategy began accumulating Bitcoin. Yet the initial rally gave way to heavy selling pressure, erasing nearly $3 billion in market value. While the company has not fully detailed its strategy or timeline for Bitcoin acquisitions, the market’s whiplash response has prompted widespread debate. GameStop’s ‘Convertible Arbitrage’ Factor


On X, analyst Han Akamatsu offered an explanation rooted in parallels to MicroStrategy’s past financing methods. He began by noting: “Let me explain to you why GameStop is falling today, as far as I understand based on my MSTR experience.”


According to Akamatsu, when MicroStrategy previously issued convertible notes, large institutional buyers used a strategy known as convertible arbitrage: “When MSTR issued convertible notes, institutional buyers used convertible arbitrage: They bought the bonds, shorted MSTR stock to hedge [and] waited for the bond to either convert or mature.”


He emphasized that this process created “artificial short pressure” on the stock—despite MicroStrategy’s own bullish outlook on Bitcoin. Akamatsu then referenced MicroStrategy’s 2021 issuance: “In 2021, MSTR issued $1.05B of 0% convertible notes, the stock dipped after the announcement due to hedging shorts, but later exploded when Bitcoin ripped and the arbitrage unspooled.”


Akamatsu went on to connect these dots to GameStop’s current situation: “GME is following the same blueprint now:Issue $1.3B in 0% convertibles, likely going to buy Bitcoin [and] institutions are now shorting GME to hedge.”

He pointed out that if GME or Bitcoin rises substantially, the short positions set up to hedge the convertibles could be unwound en masse: “If GME or BTC goes up a lot, the trade gets very interesting as we have a squeeze opportunity here.”


He further explained the typical ratio of shorts involved: “A common practice is to short 50–70% of the bond’s notional value in stock. They make money on the arbitrage between the bond conversion price and the stock price, even if the stock stays flat or drops.”


Finally, Akamatsu noted that the volume-weighted average price (VWAP) would influence the conversion price: “VWAP pricing window behavior, they’ll want the stock low to get favorable conversion. Conversion price will be based on GME’s VWAP […] from 1:00 PM to 4:00 PM EDT on the pricing day.” Criticism Over the Risk


Some market watchers have criticized GameStop’s board for incurring what appears to be self-inflicted selling pressure. One user on X questioned whether Chairman Ryan Cohen (often referred to by the initials RC) had miscalculated: “Hi Han, great analysis as usual… however, nearly $3bn market value is wiped out today. RC should really ask himself if it is worth it or he miscalculated. The hedge is supposed to mitigate risk in nature. But itself creates much more risk.”


Akamatsu stood by his take, asserting: “Calculated and all going according to plan. If you’re not really into the MSTR playbook, I recommend you to check their strategy.”


In another post, Akamatsu drew comparisons to a setup he observed with Celsius Holdings (NASDAQ: CELH): “GME has a similar pattern with what CELH had when I claimed this was an easy 100% setup.”


He referenced chart analyst Thomas Bulkowski’s work on wedge patterns, hinting that a retracement might offer a buying opportunity: “If GME starts retracing after that solid breakout, textbook Bulkowski says that 7/10 times price tests the wedge again and then has a greater takeoff.” GME falling wedge pattern | Source: X @Han_Akamatsu


The analyst reassured traders not to panic if the stock dips further, stressing it could be a standard technical move: “So, if you see GME retrace … don’t panic as this will be normal. You’ll have another chance at a great entry when this tests the wedge again.” He concluded on a hopeful note: “I’m having my fingers crossed this will simply skyrocket.”


At press time, GME stood at $22.30. GameStop share price, 1-day chart | Source: GME on TradingView.com Featured image created with DALL.E, chart from TradingView.com

News Feed

Bitcoin ETFs’ Hot 7-Day Streak Ends, Record $55 Million In Net Outflows
Este artículo también está disponible en español. The spot Bitcoin ETFs (exchange-traded funds) in the United States have recorded their first net outflow day in the past
Polygon Labs’s MATIC-POL migration confirmed for Sept. 4
Arijit Sarkar57 minutes agoPolygon Labs’s MATIC-POL migration confirmed for Sept. 4The upgrade is part of Polygon"s 2.0 roadmap to enhance its zero-knowledge-based layer 2 chains ecosystem, aiming to expand the utility
Elizabeth Warren wants ‘level playing field’ for crypto and Big Tech AI blocks
Martin Young2 hours agoElizabeth Warren wants ‘level playing field’ for crypto and Big Tech AI blocksThe U.S. senator wants crypto and traditional finance to play by the same rules and for tech giants to be barred fr
Top Finiko Crypto Pyramid Executive Arrested in Russia’s Tatarstan
Top Finiko Crypto Pyramid Executive Arrested in Russia’s Tatarstan A high-ranking representative of Russia’s notorious Finiko Ponzi scheme has been arrested in Tatarstan.
Up to 99% of Mt. Gox’s $8.2B Bitcoin could be sold — Analyst
Zoltan Vardai13 hours agoUp to 99% of Mt. Gox’s $8.2B Bitcoin could be sold — AnalystNearly all of Mt. Gox’s former creditors might be looking to sell their Bitcoin, which has increased by over 8,500% in value in t
Crypto markets rally, but Ethereum struggles to keep pace with Bitcoin
Marcel Pechman4 hours agoCrypto markets rally, but Ethereum struggles to keep pace with BitcoinETH price continues to trail far behind Bitcoin’s year-to-date gains even after the crypto market responded positively to t
Indian Government Needs More Time to Finalize Crypto Bill: Report
Indian Government Needs More Time to Finalize Crypto Bill: Report Indian government officials reportedly said that India’s cryptocurrency bill will require more time because
XRP Bulls Shake Off Crash, Target This Major Resistance On The Road To $3.85
Este artículo también está disponible en español. After facing a significant crash to $3.7, XRP bulls are making a strong comeback, attempting to break above resistance l
Address poisoning attacker sends $153K ETH to victim and agrees to negotiate
Christopher Roark5 hours agoAddress poisoning attacker sends $153K ETH to victim and agrees to negotiateThe attacker who pulled off a $68 million address poisoning scam has posted two messages agreeing to negotiate with
NY Regulator Proposes New Coin Listing Requirements
NY Regulator Proposes New Coin Listing Requirements The New York State Department of Financial Services, the Bitlicense regulator, has published a proposed framework for licensed
Binance to Open Beijing Office Amid China’s Renewed Blockchain Push
Malta-based cryptocurrency exchange Binance is opening an office in Beijing, two sources with knowledge of the matter told CoinDesk. The new outpost will join Binance’s current mainland China office in Shanghai.
Crypto Lender Celsius to Be Acquired by Novawulf, Exiting Chapter 11 
Crypto Lender Celsius to Be Acquired by Novawulf, Exiting Chapter 11  Crypto lender Celsius’ committee of unsecured creditors has chosen the digital asset investment firm N