Cryptocurrency and derivatives exchange site FTX lists GameStop’s stock after its price climbed more than 1,200% from US$20 on January 12 to US$358 on January 28. FTX CEO Sam Bankman-Fried announced GME’s listing through a tweet from his personal Twitter account saying ‘Alright fine, why not,’ followed by a link that opens to FTX’s GME stock chart on January 27.
The steep price pump was a result of retail investors coming together on the social forum site Reddit and buying significant amounts of GME stocks after short-selling plans by hedge fund Melvin Capital were revealed.
Over 2 million subscribers in the subreddit forum ‘wallstreetbets’ bought GME stocks since January 21, causing its price to dramatically increase beyond US$300. Mobile investing apps such as Robinhood allowed numerous retail investors to participate in the trade that caused short squeezes on the price.
GameStop’s listing on FTX enables crypto investors to buy the tokenized version of the popular stock. FTX is known for its fractional stock offerings that allow crypto users to invest in derivatives of lucrative stocks at a smaller price and with less capital. Since opening their services in October 2020, the crypto derivatives exchange site has been offering 12 equities and crypto pairings for trade such as fractionalized shares of Tesla (TSL), Apple (APPL) and Amazon (AMZN).
Famous tech personalities have compared GME’s parabolic growth to BTC after its price spiked to US$350 on January 27. Aaron Levie, the CEO of cloud and file-sharing services company Box, tweeted ‘Bitcoin is so 2020. GameStop is the new store of value.’
Additionally, SpaceX and Tesla’s Elon Musk tweeted ‘Gamestonk!!’ on January 26, followed by the link on the subreddit community that drove the price to increase by 60%. GME’s listing on FTX is expected to increase its price even more since it incorporates the stocks into the crypto space where traders are more speculative and unorthodox compared to Wall Street traders.
Crypto news site Cointelegraph compares this phenomenon to the crypto sector when Chainlink investors grouped against hedge fund Zeus Capital when it attempted to short the altcoin. Chainlink investors calling themselves ‘LINK marines’ refused to sell their assets and drove the coin to an all-time high during this time in early 2020.
However, Wall Street traders are bearish on GameStop’s unusual performance with short-sellers such as Andrew Left of Citron Research predicting GME will drop to US$20 fast due to the ‘unnatural, insane and dangerous’ trading displayed by the ‘angry mob’ of Reddit investors.
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