Key Insights:
- GME stock recently fell by 24% after GameStop announced plans to acquire more Bitcoin.
- GME stock has consistently rebounded from $20 with strong buying pressure, raising the question, will history repeat?
The video game retailer GameStop and its GME stock have become a hot topic in the finance industry following the company’s interest in buying Bitcoin (BTC). GME stock recently fell by 24% after GameStop announced plans to acquire more Bitcoin by selling $1.75 billion worth of convertible bonds.
Why is GME Stock Price Falling?
In simple words, GameStop appears to be raising cash from investors by issuing debt in the form of convertible bonds. These bonds can be converted into GME stock either before or when they mature in 2032.
On May 28, 2025, GameStop purchased Bitcoin worth $513 million. Since then, GME stock has consistently fallen, with its price dropping from $35.85 to $22.
GameStop, famously known as a meme stock for its exceptional 2021 rally fueled by retail traders on Reddit’s r/WallStreetBets, made headlines again in March by updating its investment policy to include Bitcoin as a “treasury reserve asset.”
The company now holds Bitcoin on its balance sheet, marking a strategic move to incorporate cryptocurrency into its corporate treasury strategy.
It seems the company is following in the footsteps of Michael Saylor’s software firm, MicroStrategy (MSTR), which also issues convertible bonds to acquire Bitcoin and has become the largest corporate holder of Bitcoin.
Despite the good intentions behind GameStop’s strategic Bitcoin acquisition, investors remain skeptical due to the volatility of BTC and the broader cryptocurrency market.
However, CEO Ryan Cohen recently stated that the decision to buy Bitcoin is driven by macroeconomic concerns, as the digital asset, with its fixed supply and decentralized nature, could serve as a hedge against certain risks.
Analyst Warns of Running Bitcoin Treasure
Amid the ongoing uncertainty, David Yermack, a professor at NYU Stern School of Business, stated in a report, “The main risk in running a leveraged ‘bitcoin treasury’ strategy is that a rapid drop in the price of bitcoin would lead to the possibility of bankruptcy.”
David’s statement appears to be proving accurate as GME stock continues to plunge. Data shows that GameStop’s revenue has been in continuous decline since 2023, the year the video game retailer shifted its focus to digital game purchases instead of in-store visits.
A recent report reveals that the company’s first-quarter revenue fell by 6%, down from $748 million recorded in the same period last year.
Besides company bets on Bitcoin, the CEO in the annual meeting said that GameStop is focusing on trading cards as “a natural extension” of its existing business, according to a transcript on FactSet. He said that this market is embedded in physical retail and has “high margin potential.”
GEM Stock Price and Key Technical Levels
At press time, GME stock is trading near $22.99, having lost 1.50% of its value in the past 24 hours. Over the past five trading days, the stock has dropped by 20.78%, and nearly 17% over the past month, according to Google Finance.
With this notable price dip, GME stock appears to be trading near a key support level of $20. Historically, this level has acted as an area of buying pressure, where investors and experts have seen an ideal buying opportunity.
Daily chart analysis reveals that since October 2024, whenever GME stock has approached or touched this level, it has experienced buying pressure followed by a significant upside rally.
This time, however, it will be crucial to see whether GME stock will repeat its history or continue to decline in the coming days.
