The price of Gamestop stocks have since fallen sharply.
How Gamestock Prices Rose
Reddit users on the subreddit /r/WallStreetBets coordinated a mass purchase of GME to short the stock. This strategy involves borrowing stock, then selling it, with the intention of buying it later, at a lower price.
By some accounts, the price of GME rose by more than 2500%, from $18.83 to $483. The stock’s price currently stands at $95 after a renewed collapse on February 3rd.
The purchases were largely carried out through Robinhood, which briefly suspended some of its services to raise more funds for clearinghouse settlements. Other brokers, including Webull and Interactive Brokers, briefly restricted trading activity as well.
Additionally, regulators commented on the incident. The U.K. Financial Conduct Authority and the U.S. Securities and Exchange Commission have both warned about the situation without taking direct action.
Has Cryptocurrency Been Affected?
At least one cryptocurrency, Dogecoin, was affected by the incident.
The subreddit /r/WallStreetBets was responsible for Gamestop’s initial price surge. An adjacent subreddit, /r/SatoshiStreetBets, was responsible for coordinating a similar price surge for the Dogecoin cryptocurrency.
DOGE prices rose from less than $0.01 to $0.07 on Thursday before falling to $0.02 on Sunday. Prices rose again to $0.05 on Monday. The coin should be considered a risky purchase for obvious reasons.
It remains to be seen whether social media communities will attempt to cause similar price surges in the future, or whether such plans will succeed.
It is unlikely that the small community will be able to affect Bitcoin prices significantly, given that BTC already has attracted widespread attention and investment from all corners of social media and the internet.
Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.