Crypto Twitter has been enraptured and excited to share some parabolic excitement with an American publicly-traded stock.
Gamestop stock hit multiple highs, going from $18 to $157 between Jan. 8 and Jan. 25. But some are blaming Gamestop’s rise on Reddit manipulation.
Gamestop: The Melting Icecube
The meteoric rise of Gamestop (GME) felt very, well… pumpy. The corporation had been struggling for many months, even years. During the summer, the stock price saw a low of $2.
This came after multiple years of a decline in retail businesses and a long march downward. Business Insider even said that Gamestop was, “dying,” and Wedbush analyst Michael Pachter had called the world’s largest video game retailer a “melting ice cube.”
Gamestop’s poor outlook was due to both lowering retail sales in general, combined with its cash cow — used game sales. With digital distribution coming to prominence, this once-lucrative business was drying up.
The stock, or as stocks are facetiously called on the internet “stonks,” came to attention on Jan 22, 2021, when the price spiked to a new all-time high of about $60. The stock had risen slightly since the announcement of strong holiday sales on Jan 13, 2021.
There was speculation that a Reddit thread in r/WSB (Wall Street Bets) was pumping the price by putting pressure on a large number of shorts. This “short squeeze” shot the price up, and can be considered a type of manipulation.
But this pressure went too far. According to Business Insider, a begrudged short seller said that he was victimized by traders on r/WSB. This resulted in a $1.6 billion loss to short-sellers in just a single day (Jan 22, 2021).
That squeeze apparently only increased the determination of short sellers, and a bigger squeeze drove the price to almost $160 — three times what it was last week.
The price has since cooled off, and is around $77 at the time of writing.
Crypto Twitter Reacts
Crypto Twitter, which is filled with professional and retail traders alike, could not help but react. With the volatility of crypto, and the general ease of placing derivative orders, traders tend to be attracted to high-risk bets and like to long and short crypto assets along with stocks.
Meanwhile, Trustswap CEO Jeff Kirdeikis pointed out the hypocrisy of crypto’s critics. He pointed out that Wall Street stocks are just as vulnerable to manipulation as crypto assets, in his opinion.
Eric Conner, an Ethereum developer who founded ethhub.io, shared Kirdeikis’ sentiment, pointing out that a 660% pump looks like something from the crypto markets.
Developer Corbin Page also compared the Gamestop debacle to crypto, calling it a “crypto narrative.”
Twin 1, a Cardano staking pool’s Twitter account, said that compared to Gamestop, crypto is, “just getting started.”
Some analysts are saying it is finally time to short Gamestop after this rollercoaster. But be careful, this stock meme-powered.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.