What happened
The price of Loopring (LRC +1.21%) is rapidly falling in Monday's trading. The token was down roughly 9.7% over the previous 24 hours as of 4:15 p.m ET amid sell-off pressures for the broader cryptocurrency market. Meanwhile, Bitcoin and Ethereum were down roughly 2.1% and 3.9%, respectively.
With a market capitalization of roughly $1.6 billion, Loopring ranks as the 71st largest token by market cap and is a fairly small cryptocurrency compared to top players in the space. As such, it's not unusual to see the token post dramatic losses on days when the crypto market is down, but it looks like investors are also giving up on one of the token's recently hyped positive pricing catalysts.
Image source: Getty Images.
So what
The Wall Street Journal published a report on Jan. 6 indicating that video game retailer GameStop (GME 2.84%) is gearing up to launch a division centered on cryptocurrency and non-fungible token (NFT) marketplaces as part of the business's turnaround push. It had previously been rumored that the company was looking at partnering with Loopring as part of the initiative.
Loopring provides a protocol that allows for the creation of order book-based exchanges on the Ethereum blockchain, and GameStop could have hypothetically used the service to accelerate its push into crypto and NFT markets. However, a source speaking with Barron's subsequently confirmed that GameStop had looked into potentially acquiring the Loopring organization but backed away from a deal due to logistical issues connected to its operations in China.
With the cryptocurrency market seeing prolonged selling pressures and a source of potentially explosive growth for LRC seemingly off the table, investors are moving out of the token.
Now what
Loopring is down roughly 40% from its peak on the day that the Journal published its report first detailing GameStop's crypto and NFT plans. Even after the significant pullback, the token is still up roughly 211% over the last year.
GameStop's reported decision to back off of acquiring Loopring doesn't necessarily mean that the organization's token won't climb above its current price. It's possible that Loopring might attract other valuable partnerships or see other catalysts that help push its token price higher, but investors should proceed with the understanding that LRC is a high-risk investment.
