TLDR
- GameStop’s short sales volume increased 234% to 30.85 million shares after announcing Bitcoin acquisition plans
- NYSE imposed a Short Sale Restriction (SSR) after GME stock fell 22%, erasing previous gains
- The short volume nearly reached levels seen during the famous 2021 short squeeze
- GameStop announced a $1.3 billion convertible notes offering for “general corporate purposes, including acquiring Bitcoin”
- Analysts have expressed skepticism about the Bitcoin strategy, comparing it to dot-com era tactics
Market Reaction to GameStop’s Bitcoin Strategy
GameStop’s announcement of plans to purchase Bitcoin has triggered a dramatic market reaction. The New York Stock Exchange (NYSE) imposed a Short Sale Restriction on GameStop shares after short selling volume surged by 234%.
The restriction came after GME stock plunged 22% in a single trading day. This sharp decline erased the 12% gain the stock had seen following the initial Bitcoin announcement.
Short selling volume reached 30.85 million shares on March 27, according to TradingView data. This level approaches the 33.26 million shares seen during the famous GameStop short squeeze of January 2021.
The NYSE’s Short Sale Restriction kicks in automatically when a stock drops more than 10% from the previous day’s closing price. The rule remains in effect for the rest of the trading day and the following trading day.
At the time of the reports, GME was trading at $22.09. The stock had reached its lowest point since October following the steep decline.
Financing the Bitcoin Purchase
GameStop did not specify the exact amount of Bitcoin it plans to purchase. However, after markets closed on March 26, the company announced a $1.3 billion convertible notes offering.
These convertible senior notes represent debt that can later be converted into equity. GameStop stated the funds would be used for “general corporate purposes, including acquiring Bitcoin.”
Some market observers have linked the stock’s decline directly to this convertible notes announcement. Han Akamatsu noted in a social media post that GameStop’s stock is dropping for the same reason Strategy (formerly MicroStrategy) declined after issuing convertible notes.
“In 2021, MSTR issued $1.05B of 0% convertible notes, the stock dipped after the announcement due to hedging shorts, but later exploded when Bitcoin ripped and the arbitrage unspooled,” Akamatsu said.
Akamatsu added: “GME is following the same blueprint now…If GME or BTC goes up a lot, the trade gets very interesting as we have a squeeze opportunity here.”
Analyst Skepticism
The market’s negative response highlights growing concerns among experts about GameStop’s Bitcoin strategy. Several analysts have questioned the move’s strategic rationale.
Tom Sosnoff, founder and CEO of Tastylive, told Yahoo Finance that GameStop’s decision to buy Bitcoin feels “a little dot-comish” to him. He compared it to companies adding “.com” to their names during the internet bubble.
“It feels a little like, oh, I’m going to throw a dot com at the end of my name, I’m going to buy some Bitcoin with our excess cash because we can’t find a company that is going to be accretive,” Sosnoff said.
Bret Kenwell, US investment analyst at eToro, expressed similar concerns. He told Reuters that “investors are not optimistic on the underlying business” of GameStop.
These comments reflect broader skepticism about the long-term viability of GameStop’s pivot toward Bitcoin acquisition. Critics question whether this strategy represents a sound business decision.
The massive stock price drop resulted in GameStop losing around $3 billion in market capitalization in just one day. This loss underscores the degree of investor uncertainty about the company’s new direction.
While GameStop’s stock tumbled, it’s worth noting that the highest day of short sales still belongs to June 3, 2024. On that date, short volume reached 46.20 million shares.
This peak coincided with Keith Gill’s return to GameStop trading. Gill, known for his role in the 2021 short squeeze, revealed on June 2 that he had begun trading GME again with $180 million.
The current market situation presents both risks and potential opportunities. If GameStop or Bitcoin prices rise substantially, some analysts believe a squeeze opportunity could develop.
$GME SSR Rule is on for tomorrow.
They can still short, but only if the stock moves up before they can short into it.
Smashing the bid over and over is restricted. pic.twitter.com/oVHumcv5XS
— Han Akamatsu 赤松 (@Han_Akamatsu) March 27, 2025
However, the immediate market reaction suggests deep skepticism about GameStop’s Bitcoin strategy. The coming days will be crucial as traders watch to see whether the SSR provides any support or if bearish sentiment continues to dominate.
Technical analysis shows the stock breaking down on high volume. Key support levels to watch include the $20 mark, while resistance may form in the $25-$27 range.
GameStop now faces the challenge of convincing investors that its Bitcoin approach is a wise decision that will ultimately benefit the company and its shareholders.
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