Yes, bitcoin could be the new GameStop – CNBC

Yes, bitcoin could be the new GameStop – CNBC

It has been a volatile few months for bitcoin.

On Friday alone, the cryptocurrency briefly shot 20% higher after billionaire Tesla founder Elon Musk changed his Twitter bio to “#bitcoin.”

Though it quickly gave up those gains, there are parallels between bitcoin’s swift move higher and the GameStop stock mania, which continues to dominate the global news cycle.

The battle of hedge-fund short sellers versus retail traders who are coordinating on social media to drive the price higher could be a sign of what’s to come for the world’s biggest cryptocurrency.

Shorting bitcoin

Data from crypto news and analysis company The Block shows that hedge funds are short bitcoin by more than $1 billion.

That term “shorting” means that traders and hedge funds are betting that the price of bitcoin will go down. Those short positions ramped up starting in October 2020, just as bitcoin’s latest rally began to take hold.

Meanwhile, individual investors are still buying into bitcoin, among other cryptocurrencies, as they bet that the price will go up.

Sound familiar?

Retail brokerages including Robinhood have extended trading restrictions on stocks such as GameStop, and as of Friday, the trading app is also limiting trading in cryptocurrencies.

Crypto fundamentals

Unlike GameStop, a brick-and-mortar mall business that was closing stores even before the pandemic led to widespread shutdowns, analysts say the fundamentals underlying bitcoin tell a more promising story.

Analysts at JPMorgan think the price of bitcoin could rally as high