Melvin Capital has announced that it is closing its GME position. This has had a drastic effect on the stocks as they have sunk more than 40% on FTX in the latest twist to the GameStop saga.

A news post on cryptobriefing claimed that today morning, Melvin Capital announced they are going to close its position on GME. The FTX has listed tokenized stocks and futures for GameStop because of the announcement of the asset’s sudden rise in the stock market.

As a result of Melvin Capital’s announcement, the tokenized GME stocks have plunged more than 40%. The GME closed at $148 last night. That was thanks to a short squeeze generated due to few generous Reddit users.

John Morgan is a market analyst and trader in the bitcoin market, had this to tweet on Melvin Capital Closes Short, Tokenized GME Plummets on FTX.

As soon as the news reached traders, the tokenized GameStop Stocks (GME) started to sink quicker than the Titanic on FTX. FTX is one of the most popular exchanges that is facilitating trading on the tokenized stocks and futures. 

Unfortunately, what was supposed to be a good week for GameStop turned out to be the worst for it. The tokenized stocks on FTX sunk from $350 to $180. However, they have managed to remain stable at $212, which resulted in a 35% retrace.

The futures are also down from reaching $350 to $200 with a massive 40% drop. The news was broken on CNBC. Earlier this week, they accounted that Melvin Capital would receive a bailout amounting to $2.75 billion from Citadel and Point72.

Early this year, their stock was hitting more than 50% with the news of Chewy founder Ryan Cohen’s appointment. Due to the decrease in price, Melvin Capital had to take short positions on GME. 

A group of Reddit users, part of the subreddit /r/wallstreetbets, came together to pool in a short squeeze. This led to a small increase in GME. It is to be noted that two billionaires, Elon Musk and Chamath Palihapitiya, helped raged the flames on Twitter. 

Mike Novogratz, who is Galaxy Digital founder, said on Twitter that the short squeeze was “a colossal endorsement of DeFi.” One can only wait and hope for the remaining drama to unfold once the New York Stock Exchange opens at 09:30 Eastern Time.