GameStop Shares Drop After Big Bitcoin Purchase
Shares of GameStop fell sharply on 28 May after the company announced its purchase of a large amount of Bitcoin. GameStop, a retailer known for video games and collectibles, saw its share price slide by almost 11%. The stock closed at $31.21 on the New York Stock Exchange, marking a clear market reaction to the news. This type of drop is often seen when investors decide to sell shares after a long-expected announcement is finally confirmed.
The company revealed it had bought 4,710 Bitcoins, valued at around $513 million based on recent prices near $107,000 per Bitcoin. This confirmed plans GameStop had first mentioned in late March to adopt a Bitcoin treasury strategy. For months, there had been rumours and speculation about the company’s move into cryptocurrency, but the purchase announcement made it official.
Image 1: GameStop (Source: CNBC)
Trump Media Shares Also Slide
On the same day, shares of Trump Media and Technology Group, the parent company of President Donald Trump’s Truth Social platform, also experienced a sharp fall. TMTG had announced a $2.5 billion capital raise to purchase Bitcoin, a move it had previously denied.
Since the announcement on 27 May, the company’s stock has fallen by more than 24%.
Bitcoin itself has seen some price volatility recently. In the 24 hours leading up to these announcements, the cryptocurrency’s price dropped by close to 2%, hovering just under $107,000. This decrease likely contributed to investors’ concerns, resulting in falling stock prices for both GameStop and TMTG.
Why Are Companies Buying Bitcoin?
GameStop’s decision to add Bitcoin to its treasury is part of a growing trend. More companies are turning to Bitcoin to protect their cash reserves from the effects of inflation and uncertain economic times. Instead of holding large amounts of cash, which can lose value during inflation, these businesses are choosing to hold Bitcoin as a store of value.
This approach is not new. MicroStrategy was one of the first companies to make a big Bitcoin purchase, starting back in August 2020. Since then, other companies like Japan’s Metaplanet and Brazil’s Meliuz have followed suit by increasing their Bitcoin holdings. These companies are using Bitcoin to strengthen their financial positions and prepare for a future where digital assets play a bigger role.
Explaining the Bitcoin Move
At the Bitcoin 2025 conference in Las Vegas, GameStop’s CEO Ryan Cohen shared why the company believes Bitcoin is a good asset to hold. He pointed out that both Bitcoin and gold can act as hedges, meaning they can protect against the loss of value in traditional currencies.
However, Cohen explained that Bitcoin has some advantages over gold. Unlike gold, Bitcoin can be moved instantly and securely around the world. Gold is heavy and costly to ship, requiring insurance and secure storage, which adds to its expenses. In contrast, Bitcoin’s authenticity is verified by blockchain technology, making it easier to confirm and manage. It can also be safely stored in a digital wallet without the high costs associated with gold storage.
Another factor Cohen mentioned is Bitcoin’s limited supply. There will only ever be 21 million Bitcoins, making it a scarce asset. This scarcity helps protect its value over time. Meanwhile, gold’s supply could increase if mining technologies improve, potentially affecting its value.
He also highlighted that Bitcoin’s market is still relatively young. While gold’s market size is around $20 trillion, Bitcoin’s market is about $2 trillion. This means Bitcoin could see significant growth as it becomes more widely used and accepted.
Image 2: GameStop purchase Bitcoin (Source: Crypto Economy)
What Does This Mean for Investors?
The market’s response to GameStop and TMTG’s Bitcoin announcements shows some investors are cautious. The immediate drop in share prices suggests uncertainty about how these moves will affect the companies in the long term.
Bitcoin’s price can be volatile, rising and falling sharply over short periods. Holding large amounts of the cryptocurrency could expose companies to these fluctuations, which some investors may view as risky. Additionally, while many see Bitcoin as a hedge against inflation, others remain sceptical about how it fits into traditional financial strategies.
Read Also: President Trump Backs Push for United States to Hold One Million Bitcoin
Despite this, the trend of companies investing in Bitcoin is growing. It reflects wider concerns about inflation and the value of fiat currencies, which are traditional government-issued money. With ongoing economic challenges around the world, businesses are looking for new ways to secure their financial future.
