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- GameStop’s decision to add Bitcoin to its portfolio has boosted investor sentiment, with its stock rising 8.3%.
- Despite a 28% revenue decline, analysts are hopeful Bitcoin will strengthen the company’s financial position.
GameStop, the popular video game retailer, has officially announced it will include Bitcoin in its investment portfolio. The decision follows in the footsteps of companies like Strategy, which has been heavily investing in Bitcoin.
Despite reporting a revenue decline, GameStop’s stock surged 8.3% in after-hours trading after the company’s board approved the move. The decision is part of GameStop’s broader strategy to diversify its holdings and recover from a challenging financial period.
The retail giant, which has faced difficulties due to the shift toward digital gaming and online shopping, is now doubling down on a potentially lucrative asset. This move comes just weeks after pro-crypto President Donald Trump signed an executive order to establish a strategic reserve of cryptocurrencies.
Financial Impact and Market Reaction
GameStop’s latest move has been met with positive investor sentiment, with the company’s shares seeing an uptick in value following the announcement. This move aligns with a 24% rise in Bitcoin’s value over the past year, fueled by supportive government policies and growing institutional interest.
Although the company reported a revenue decline of 28% for its fourth quarter, dropping to $1.28 billion from $1.79 billion in the previous year, its net income more than doubled. GameStop posted a net income of $131.3 million, up from $63.1 million in the same quarter last year.
Cost-cutting measures and higher-margin sales drove GameStop’s jump in profitability despite a decline in its core business. The company has shown resilience by diversifying into new revenue streams, including Bitcoin investments, and has not yet set a cap on how much Bitcoin it will acquire, though it may sell its holdings in the future.
The decision was formally announced in a shareholder letter after GameStop’s earnings report, where the board of directors unanimously approved incorporating Bitcoin as a reserve. This follows earlier rumors that arose after CEO Ryan Cohen shared a photo with Michael Saylor, CEO of Strategy, which led to speculation.
Additionally, Strive Asset Management, a GameStop shareholder, had publicly urged the company to use its $5 billion cash reserve to purchase Bitcoin, a recommendation GameStop has now adopted.
Bitcoin’s Growing Role in Corporate Investment
GameStop’s embrace of Bitcoin aligns with a larger trend of corporations looking to cryptocurrency as a strategic asset. Software maker Strategy has been accumulating bitcoin since October and added $10.7 million to its holdings last week, increasing its total to $41.6 billion.
The growing trend of corporate bitcoin investment is seen as a hedge against traditional financial risks, with some analysts viewing companies holding large bitcoin reserves as safer alternatives to direct cryptocurrency investment.
Meanwhile, Bitcoin is showing signs of a potential rebound, with analysts predicting a surge toward the $90,000 mark. Analysts believe the current 24-hour price movement, though negative, is temporary, with Bitcoin on the cusp of a major rebound.
According to ETHNew’s recent analysis, a rare buy signal has appeared, triggered by a divergence between global liquidity trends and Bitcoin’s price. This divergence, which aligns Bitcoin’s logarithmic price scale with global money supply data, historically precedes major price rallies.
In addition, institutional buying from firms like Binance, which recently purchased $250 million worth of Bitcoin, and Metaplanet, which added 150 BTC to its holdings, combined with reduced selling pressure post-March lows, further supports the likelihood of a recovery. The Global Liquidity-ZScore divergence hitting -3 is another key signal, historically leading to significant BTC price rallies.
As reported by ETHNews, Standard Chartered recently replaced Tesla with Bitcoin in its modified “Mag 7B” index, a move that highlights Bitcoin’s growing stature in the global investment landscape. Bitcoin’s market capitalization, now valued at $1.7 trillion, is more than twice that of Tesla, signaling a shift in how both institutional investors and the public view the cryptocurrency.
