Bitcoin’s price plummeted below $87,000 amid a market downturn triggered by GameStop’s surprise bitcoin treasury announcement.
The price of Bitcoin (BTC) plummeted below $87,000 during U.S. trading hours on Wednesday, undoing gains made following the news of ‘GameStop‘‘s bitcoin treasury announcement overnight.
Risk assets in general were experiencing a downturn on Wednesday, which may have contributed to the pressure on crypto markets. The S&P500 and Nasdaq indexes fell 0.8% and 1.6%, respectively, erasing most of their gains since Monday’s opening. Furthermore, concerns over the U.S. debt ceiling, including a warning from the ‘Congressional Budget Office’ that the federal government may run out of money as soon as August if lawmakers don’t raise the debt limit, also weighed on investor nerves.
GameStop is a leading American video game, consumer electronics, and gaming merchandise retailer.
Founded in 1994, it has grown to over 5,500 stores worldwide.
The company's success can be attributed to its ability to adapt to changing market trends, including the shift from physical game sales to digital downloads.
Despite facing challenges from online retailers like Amazon, GameStop continues to thrive by offering exclusive pre-owned games and a loyalty program.
In recent years, the company has also ventured into esports and gaming events, further expanding its reach.
The ‘Get Out of Jail Free’ Card: Analysts Question GameStop’s Bitcoin Buying
One analyst questioned why ‘GameStop’‘s decision to buy bitcoin was considered bullish. He likened it to a ‘get out of jail free’ card for companies like GameStop, which he referred to as ‘zombie companies.’ This sentiment is reminiscent of comments made about publicly traded miners who decided to stack bitcoin beyond their mining activity, noted James Check.
Bitcoin’s price rose following GameStop‘s announcement but halted just shy of the $89,000 level.
Bitcoin is a decentralized digital currency created in 2009 by an anonymous individual or group using the pseudonym Satoshi Nakamoto.
It uses cryptography for secure financial transactions without the need for intermediaries like banks.
Bitcoin operates on a peer-to-peer network, allowing users to send and receive bitcoins using unique addresses.
The total supply of bitcoin is capped at 21 million, with new coins created through a process called mining.
However, it has since pulled back about 3% from overnight highs to $86,500. The broad-market crypto benchmark ‘CoinDesk 20 Index’ was 1.9% lower through the past 24 hours, with ether (ETH), solana (SOL), and AAVE declining around 3%-4% during the same period.
Uncertainty Lingers: Analysts Expect More Volatility
Analysts at hedge fund QCP expressed concerns that the market still lacks clarity on U.S. trade policy and the broader political landscape. They expect more sideways volatility until these issues are resolved, indicating that the market’s trajectory remains uncertain.
Volatility refers to the degree of variation in a financial instrument's price over time.
It is often measured by calculating the standard deviation of returns or using metrics such as beta and Sharpe ratio.
'High volatility indicates that prices can fluctuate rapidly, making it riskier for investors.'
Conversely, low volatility suggests more stable prices.
Volatility affects various assets, including stocks, bonds, and currencies.
