NYSE Halts Unrestrained Short Selling of GameStop as Bitcoin Bet Triggers 22% Stock Plunge
The New York Stock Exchange (NYSE) has implemented a Short Sale Restriction (SSR) on GameStop (GME) shares after a staggering 234% surge in short selling volume, reaching its highest level in nine months.
This dramatic market reaction follows the video game retailer’s announcement of plans to acquire Bitcoin, a move that has been met with skepticism and triggered a sharp 22% decline in the company’s stock price.
GameStop’s Short Volume Rockets to Levels Eerily Similar to 2021 Short Squeeze
According to TradingView data, GameStop’s short sales volume surged to 30.85 million shares on March 27th, a dramatic 234% rise over the day before. At 33.26 million shares, this figure is shockingly near to the highest short selling activity saw during the historic GameStop short squeeze of January 2021. The sheer volume of short selling points to a strong pessimistic attitude among investors questioning the company’s new strategic orientation.
GME Stock Price Tanks 22%, Erasing Bitcoin-Fueled Gains and Triggering Trading Restriction
The rise in short selling matched a notable drop in the stock price of GameStop. During the trading day, shares dropped by 22%, therefore negating the 12% increase seen the day before the Bitcoin acquisition plans were formally announced. The NYSE’s Short Sale Restriction (SSR), which is automatically enforced when a stock’s price declines more than 10% from the closing price of the previous day, was set off by this steep fall. The SSR limits short selling for the next trading day and the rest of the trading day.
Analysts Voice Concerns Over “Dot-Comish” Bitcoin Pivot, Question GME’s Core Business Strategy
The unfavorable response of the market underscores growing worries among experts and investors about GameStop’s Bitcoin venture. Tom Sosnoff, the CEO and founder of Tastylive, said the change felt “a little dot-comish,” implying it’s like businesses adding “.com” to their names during the internet bubble in an effort to increase investor interest without a clear strategic justification. Reflecting similar worries, eToro analyst Bret Kenwell said that “investors are not necessarily optimistic on the underlying business” of GameStop, casting doubt on the long-term feasibility of turning towards Bitcoin acquisition.
GameStop Technical Analysis: GME Stock Collapses on High Volume, SSR in Effect
Technically, GameStop’s stock broke really dramatically on huge volume. Strong selling pressure and confirmation of bearish trend come from the 22% intraday decline. The Short Sale Restriction’s triggering could offer some brief relief from additional immediate short selling pressure. Currently trading at $22.09, the stock is lowest point since October.
Reaching a nine-month high, the significant increase in short volume reflects the strong belief among short sellers that the stock price will keep declining. Over the next days, traders will be attentively observing the price activity to determine whether the SSR can offer any support or if the underlying negative attitude will take front stage.
While any attempts to mobilize would probably encounter opposition at the $25-$27 range, which reflects past support turned resistance, key support levels to monitor could be about the $20 mark.
$3 Billion Market Cap Evaporates as Investors Express Doubts
GameStop lost around $3 billion in market capitalization in one day from the sharp stock price drop. This enormous loss emphasizes the degree of investor uncertainty and the market’s mistrust of the company’s new plan to buy Bitcoin with a large share of a $1.3 billion convertible debt issue.
The market has responded quickly and negatively to GameStop’s attempt at acquiring Bitcoin. The steep drop in the stock combined with the increase in short selling and trading restrictions emphasizes the great uncertainty investors have about this strategic turn-about.
Critics of this strategy are wondering about its long-term viability, and the significant drop in market capitalization shows the pessimistic perspective of the market. Convincing investors that its Bitcoin approach is a wise decision that will eventually help the business and its owners will present a difficulty for GameStop today.
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