The Case for a GameStop Strategic Bitcoin Reserve

Gamestop Investment Thesis

• GME Saga Chapter #2

Gamestop has been trading slowly for the past years. Seemingly the hype has subsided. But what transpires in the background gives reason to believe that this may not be the end, but rather the beginning of a major narrative shift and potentially the reignition of chapter 2 of the Gamestop Saga.

Gamestop is currently sitting on a huge 5B USD cash & cash equivalent reserve. This unused capital slowly erodes due to inflation, a fact that Gamestop CEO Ryan Cohen is very well aware of. Whisper in the wind has been for quite some time that Gamestop is working on its transition to a more digital environment. In July 2022 Gamestop launched its NFT marketplace where people can explore, buy/sell and interact with the digital economy. Although it has not been massively successful so far, the move can be interpreted as a foreboding for the transition towards digital currencies for the company.

In early February Ryan Cohen met with Michael Saylor, CEO of Microstrategy, one of Bitcoin’s most hardcore investors, holding roughly 2.5% of the total Bitcoin supply by time of writing. Although what may have been discussed in detail is undisclosed Ryan posted the picture on his Twitter account fueling the speculation that Gamestop will use at least some of its excessive cash reserve to build a strategic Bitcoin Reserve.

Michael Saylor also most recently met with US lawmakers to push for the U.S. to become the global hub for Bitcoin. Gamestop being a U.S. company might benefit from a broader adoption and eased legislation of Bitcoin in the US, particularly if the United States begin to build a Strategic Bitcoin Reserve under Trump’s legislature.

Using at least some of its excessive cash holdings would effectively mean pegging the valuation of the company – therefore the stock price – to the price of Bitcoin, both up and down. If you have been around for some time you will be aware that there is only one reason to meet with Michael Saylor; and that is to talk Bitcoin and discuss potential ways to accumulate more of it the scarce asset before it journeys to a higher plateau of stability.

It is likely that Cohen and Saylor talked about the very real possibility of purchasing Bitcoin as a strategic reserve asset for Gamestop. Microstrategy does not only hold about 2.5% of the total Bitcoin supply, they are continuously buying more. Saylor knows exactly how to execute it on an institutional level and can therefore act as a guide and mentor for Gamestop to pull off the same thing.

With such move Gamestop would boldly initiate the transition from brick and mortar gaming shops towards a more digital economy. It is likely that they will begin with a smaller investment first to test the waters and see how investors react. If stock price reacts positively as a result of the announcement they will likely continue to buy Bitcoin in chunks, just as Microstrategy has been doing in past and present. Besides sitting on huge cash reserves which requires action, Gamestop is pressured to make an ambitious move towards a more digital direction in order to survive in this ever modernizing environment. Bitcoin might very well be the door to walk through in order to achieve exactly that.

If Gamestop indeed uses at least some portion of its excessive cash reserve to purchase a Bitcoin reserve it effectively pegs the stock price of GME to the price of Bitcoin. Once Bitcoin then begins its inevitable rally the stock will thrive, enabling more and more options to expand, and further add on to their Bitcoin reserve.

The option to turn the roughly 4800 Gamestop stores worldwide into hubs of digital currency adoption is in the realm of possibility. ATMs could be installed in GME stores worldwide, enabling people to buy and sell crypto in every bigger city on the globe. NFTs could be traded in-store. Easy access to the digital economy by just walking into a Gamestop Store. Fees of ATM/NFT transactions could then be used by the company to add on to existing Bitcoin Reserve.

Flashback

In 2021 reddit users found out that that Wall Street hedgefunds have been massively short on the Gamestop stock – in fact, short positions exceeded the total number of shares available, called naked shorting. General belief at the time was that although Gamestop may have been under pressure, this excessive shorting was not reflective of the actual valuation of the company, so people began flocking to the stock and started buying.

To keep it short (pun intended), a collective buying frenzy started, pressurizing hedge funds to make a decision to either close their excessive shorts – therefore further fueling the rally – or add on to their short position in order to suppress the price and protect their capital and partners. It was Main Street vs. Wall Street, ordinary citizens against powerful hedgefunds, the ultimate showdown.

In late January 2021 – due to the contagion of massive losses of both hedgefunds and banks involved – GameStop stock posed a significant risk to the global financial market.
In order to protect financial stability (and their capital) lawmakers, regulators, banks and stock brokers came together with a plan to rule them all.

On January 28, 2021 major brokers globally began deactivating buy buttons for the Gamestop stock, in some cases auto-closing long positions of retail investors, which inspired a widespread outrage from retail investors and eventually led to the stock topping out.

Through collaborative action under the disguise of protecting financial stability, and arguably lots of manipulation, Wall Street won this battle. But it very clearly revealed the fraudulent nature of the system for the world to see.

If you missed this Saga entirely or your memory has started to fade, it might be well worth the energy investment to digging up history again, for it might once more become relevant soon.

Keep in mind that during the height of the GameStop saga GME became one of the most heavily traded stocks globally, experiencing a massive surge in trading volume. People liked the stock. People liked the idea of David vs Goliath. The hype was off the charts, and many investors are still holding their shares to this day.

This all begs the very legitimate question: Provided with a strong catalyst – Gamestop purchasing Bitcoin as a Strategic Reserve – might the hype possibly be reignited as the stock begins to climb when Bitcoin begins its inevitable journey towards 1M USD?

To this date those very same hedgefunds are still short, despite the heavy buying of the retail in past years. The situation is basically unchanged, its just that the fire has simmered down. However this time around Gamestop possesses the power and wits to orchestrate its own resurgence by embracing a Bitcoin standard, potentially reigniting the flame and paving a way for a remarkable comeback.

Once stock price begins to rise as a result of adopting a Bitcoin Standard those hedgefunds might get defensive and begin closing out their shorts, further fueling the developing rally. It is the real test of whether the hedgefunds have learned something from the past or repeat the same mistake by adding on to their shorts in a rising trend, only to soon find themselves under immense pressure once again. History tends to repeat itself, particularly if strong money interest is involved. So it may not comes as a surprise should the stock once again become a major risk for the financial system as a consequence of pegging it to the price of Bitcoin.

Many retail investors are still sitting on their GME stocks. The infrastructure already is in place. They like the stock. Given a reignition of the narrative, how many of those retail investors would be comfortable to add on to their existing positions? How many of crypto-native folks would be interested in buying the Gamestop stock due to it then being backed by Bitcoin itself?

This might all be developing in the future and it remains purely speculative up to this point, but the rationale is not without merit. It all depends on whether Gamestop acquires a Bitcoin Reserve eventually. The whisper is in the wind.

Specs of the Trade

Let us discuss the specifications of this speculative trade. The underlying condition is that Gamestop announces the purchase of Bitcoin as a Strategic Reserve and that investors react positively (rising stock price) as a result. If this primary condition is not fulfilled the trade rationale will not get activated. Depending on conviction you wait for the announcement, or you position early in anticipation and accept the risk that it might never manifest. The bet is asymmetrical. You can only lose what you invest, but the reward may be an insane multiple of your risk. Therefore the risk is contained and it is up to personal preference.

My rationale is simple. It has merit. The narrative is there. The likelihood that Gamestop buys Bitcoin as a result of meeting with Saylor is disproportionally high. The probability of reigniting the flame of hype around GME based on that catalyst is real.

If we do it, we do it right, we do it early, and we do it with brains.

Buying GME stock through Robinhood or Revolut is the obvious option. Reality is though, many people do not have direct access to a stock broker and or platform to buy stocks, or dont even own a bank account in the first place. This second chapter of the Saga will be mainly driven by crypto-natives due to its ties to Bitcoin itself. Crypto-natives are used to buy something as simply as a click of a button – as things should be. Suddenly then, crypto natives and GME OGs from the first chapter of the saga will reunite together, for they like the stock.

We are therefore rather looking for a crypto token with ties to Gamestop in order to maximize gains. I remembered seeing GME on Solana in the past so I went down the rabbit hole and was surprised to find that the token is not only very well established, but is excellently positioned to take this role. Listed on most major exchanges with a marketcap of roughly 10M USD. Token simply paying homage to the 2021 Saga.
You get the idea. This is where I am smelling the real juice, real asymmetry right there.

Crypto is a crazy place. If you tell me in a year that a token named GME on Solana outperformed the actual GME stock by a stretch while the company adopts a Bitcoin Standard, I wouldn’t even be slightly surprised. The risk might be higher in the token than the stock, but the asymmetry of this trade is off the charts. I am not in any way affiliated with the project, my interest is purely asymmetrical.

TLDR

The rationale of this speculative trade is the anticipation of Gamestop acquiring a Strategic Bitcoin Reserve and reigniting Chapter Two of the GME Saga. Course of action is split investment GME Stock and GME on Solana for both balance and maximum gain, averaging in as low as possible, then patiently wait for things to unfold. This is a speculative trade, it’s not financial advice. Your money and decisions are your responsibility. You need to know what you do with your capital. However if the rationale makes sense to you, it might be wise to get some, just in case it catches on..

Gamestop Saga over? I dont think so. Things are brewing in the background, the whisper’s in the wind. A GME stock tied to Bitcoin and a rising Bitcoin price might very well lead to reignition & unfolding of the next chapter of the Gamestop Frenzy.

At the peak of certainty, just as the hedge funds start to believe the fire has simmered down, GameStop now finds itself in a prime position to orchestrate a transformative, liberating strike from within.

Whether they really do, we are going to find out.

Should embracing a Bitcoin Standard prove to be the breakthrough strategy against hedge funds shorting the stock it might become a blueprint for other heavily-shorted stocks to liberate themselves in the future.

And it would be quite iconic if after all the name of the company that ultimately exposes the fragile and deceptive nature of the entire financial bubble bears the name…