Watch These GameStop Price Levels as Stock Pops After Report Of Bitcoin Investment Plan

GameStop (GME) shares surged in extended trading Thursday following a report that the video game retailer is considering investing in cryptocurrencies such as Bitcoin (BTC). The company is weighing whether holding Bitcoin or other alternative asset classes could make sense for its business, CNBC reported Thursday, citing unnamed sources. GameStop did not immediately respond to a request for comment. The report comes just days after GameStop CEO Ryan Cohen posted a picture of himself with Michael Saylor, cofounder of MicroStrategy (MSTR), the largest corporate holder of Bitcoin formerly known as MicroStrategy. The move had raised speculation about GameStop's crypto plans, though CNBC reported Saylor is not involved in GameStop’s deliberations around cryptocurrency investments.

GameStop shares jumped over 10% in extended trading Thursday following the news. The stock has nearly doubled in value over the past year. The company's potential investment in cryptocurrencies could significantly influence its stock price trajectory in both the short and long term. Here's how:

1. Short-term impact (next few days to weeks):
- Speculation and FOMO (Fear of Missing Out): The mere announcement of GameStop's consideration of crypto investments could spark speculative trading, with investors rushing to buy the stock in anticipation of a positive outcome. This could lead to a short-term price surge, as seen in the after-hours trading following the CNBC report.
- Social media influence: Given GameStop's history as a meme stock, social media influencers and retail traders could amplify the price movement by discussing and promoting the news, further driving up the stock price.
- Analyst coverage: If analysts cover the story, their opinions could also impact the stock price, either positively or negatively, depending on their views on GameStop's crypto strategy.

2. Long-term impact (months to years):
- Institutional investment: If GameStop decides to invest in cryptocurrencies, it could attract institutional investors who are interested in the company's exposure to the digital asset class. This increased demand could lead to a sustained rise in the stock price.
- Regulatory clarity: If GameStop's crypto investment aligns with a more favorable regulatory environment, it could boost the company's long-term prospects and stock price. Conversely, regulatory uncertainty or negative developments could negatively impact the stock price.
- Crypto market performance: The long-term trajectory of GameStop's stock price will likely be influenced by the overall performance of the cryptocurrency market. If Bitcoin and other cryptocurrencies perform well, GameStop's stock price could benefit; conversely, if the crypto market struggles, GameStop's stock price could suffer.
- Strategic value of crypto investments: If GameStop's crypto investments prove to be strategically valuable, for example, by generating revenue or enhancing the company's brand, it could positively impact the stock price in the long term. Conversely, if the investments underperform or fail to generate expected returns, it could negatively impact the stock price.

Investors should monitor the following key price levels as GameStop's stock price reacts to the news of its potential Bitcoin investment plan:

1. Support Level near $25: During pullbacks, investors will likely be eyeing the $25 level. This price point on the chart finds a confluence of support from the upward sloping 200-day moving average, this month's low, and the stock's September countertrend peak. (Source: Investopedia article)
2. Key Overhead Areas to Watch:
- $29: Investors should keep an eye on the $29 level. The shares could run into selling pressure at this range near a horizontal line that links a range of comparable price points on the chart extending back to last year's July swing high. (Source: Investopedia article)
- $32: Buying above this level could fuel a move up to the $32 region. Investors who have accumulated shares at lower prices may look for exit points around this point near several peaks situated just below the stock's January high. (Source: Investopedia article)
- $42: To forecast a price target above this year's high, investors can use the bars pattern tool. When applying the analysis, we take the stock's trending move higher from October to January and overlay it from the falling wedge pattern's top trendline. This projects a potential upside target of around $42, a level about 60% above Thursday's closing price where investors may decide to take profits. (Source: Investopedia article)

In conclusion, GameStop's potential investment in cryptocurrencies could significantly influence its stock price trajectory in both the short and long term. Investors should monitor key price levels as the stock price reacts to the news, and consider the various factors that could impact GameStop's stock performance in the coming months and years.