GameStop, a global video game retail chain, is recorded by Crypto Exchange FTX after the stock became the most common pick on Reddit’s infamous r/Wallstreetbet It is a forum devoted to trading stock market stocks.
As if things couldn't get crazier for GameStop, $GME is now listed on a crypto exchange. If you've been loving the volatility of crypto and stocks, your life just got a lot sweeter. https://t.co/hoAomxWYgY — Cointelegraph (@Cointelegraph) January 27, 2021
The Wednesday morning FTX listing has enabled crypto traders to get in on the act as well. The bid forms part of the tokenized stocks service of FTX. This includes common stocks and indices on both spot and futures markets. This also enables crypto traders, in conjunction with fiat options, to get access to stocks using crypto and secure coins.
The stock of GameStop, trading under the ticker GME, has produced major media coverage after a spectacular rally since Jan. 12 leading more than tenfold returns.
Gamestock media coverage
R/Wallstreetbets, a subreddit for stock market traders, is mostly ascribed to the rally. For a long time, GameStop has been one of the community’s top picks. Although it split the spotlight with other high growth stocks such as Tesla or Nio.
Digital video game distribution has slowly weakened its brick-and-mortar business in the past couple of years. GameStop alone has been in poor financial condition for a longer period. The COVID-19 closures have discouraged the outlook of the business.
Melvin Capital Management made a decision based on those variables to enter a short stock position, betting that its price would go down. Sadly, because of required reporting to the United States Securities and Exchange Commission, someone at r/Wallstreetbets noticed this margin loan for the business.
In a coordinated attempt to force the short out, the subreddit then united behind the stock to push the cost to go up so far that the short position had to be liquidated. Since GME peaked at $320 in pre-market trading, the Redditors seem to have been effective in their quest, as the hedge fund revealed it had closed its spot.
Since the beginning of 2021, the unpleasant trade has reportedly caused the fund a $3.75-billion loss, totaling more than 30 percent of its money. With a $2.75 billion stake, other hedge funds “bailed out” Melvin Capital Management. Today, some of the story’s specifics remain vague. The early short position noticed by Redditors, for instance, was just $55 million in put options. Buying option risks are restricted to 100% of their cost. That means that other roles have made a strong dedication to the alleged multibillion-dollar deficit.
Inside the crypto vacuum, the tale has a very close analog. The Chainlink group rallied against a reported short position launched by a firm called Zeus Capital in the summer of 2020. The specifics of that case prompted many to doubt the real intentions of the alleged short position being revealed.
Since being classified on FTX, GME is dropped by almost 33 percent as of publishing.