GameStop’s New Crypto and NFT Wallet Unleashes Another Social Media Pump; Will the stock follow?

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GameStop has been shrewdly building the hype around its highly anticipated NFT marketplace for at least a few months. Now, with the launch of a dedicated cryptocurrency and NFT wallet, the company is reaping dividends from this strategy as conversations on social media citing GameStop spike, adding a powerful tailwind to the rankings of social domination of the title.

As a reminder, GameStop has now launched the beta version of its own browser-supported Ethereum-based wallet, which would allow users to send, receive and store cryptocurrencies (ERC 20 tokens and Ethereum ) as well as NFTs in a convenient way.

The number of Ethereum addresses containing more than 100 coins has just reached a 6-month high as the highly anticipated “merger” event is now scheduled for August 2022

As for the specifics, the wallet uses Loopring’s underlying technology by connecting directly to Ethereum Layer 2 solutions, thereby reducing gas fees or transaction processing fees. Additionally, the GameStop Wallet is currently available as a browser extension on Google Chrome and Brave, with a dedicated iPhone app expected to land shortly. In terms of security and privacy, the wallet is non-custodial in nature and comes with a “12 Word Secret Recovery Phrasewhich acts as the “key ring” for all wallet accounts.

Of course, as we’ve mentioned several times over the past few weeks, GameStop’s highly anticipated Dedicated NFT Marketplace is nearing an official launch, which, in turn, adds to the hype around the stock. This week’s wallet launch further strengthens the prognosis of this development materializing before the July 2022 deadline.

GameStop is witnessing a resurgence in social media conversation volumes, but the title continues to face strong headwinds

According to the tabulation by the Twitter account @santimentfeedMonday’s GameStop Wallet launch drew mixed reactions from investors.

The GameStop NFT Twitter account offers investors “Hello” and the monkeys respond by raising the stock to session highs

Additionally, the blog post associated with the account noted that GameStop is currently experiencing another “social pump”.

Source: Santiment

In fact, as the chart above shows, the volume of social media conversation around GameStop easily eclipsed that around the broader S&P 500 Index on Monday.

This brings us to the crux of the problem. Social media conversation volumes can sometimes serve as leading indicators for a stock price pump. However, as the broader market remains in the bear phase, hammered by the relentless inflationary impulse that is now seeping into the margins of consumer-facing businesses, the excessive depletion of savings at the consumers is beginning to affect some companies’ revenue metrics and a hawkish Federal Reserve trying to moderate the wealth effect spreading throughout the US economy by downgrading stocks, a sustained pump in GameStop stocks remains fairly unlikely to this stage.

Source: https://www.tradingview.com/chart/?symbol=INDEX%3AS5TH

Therefore, we don’t think GameStop’s stock will bottom out until the rest of the market does. We continue to monitor the percentage of S&P 500 stocks that remain above their respective 200-day moving averages (S5TH Chart) to know when this eventuality will occur. As can be seen in the chart above, this metric is approaching previous capitulation levels but is still not at that crucial threshold.

In the meantime, the current social media pump should provide a brief tailwind to GameStop shares, which recently fell to new year-to-date lows. Looking ahead, GameStop’s upcoming quarterly results on the June 01, 2022 should provide another opportunity for investors to check the stock’s near-term outlook.

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