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The young investors are now taking on the old Wall Street guard! Over the past week, an obscure Reddit forum Wallet Street Bets has caused quite a stir by nearly bankrupting a Wall Street hedge fund, Melvin Capital. The investment fund was able to stay afloat thanks to a bail-out. Melvin Capital had built up a large short position to steer the GME share of the GameStop retail chain to new bottoms.
GameStop was in danger of going bankrupt. However, from an unlikely angle, GameStop was protected from further losses. According to an analysis by Roaring Kitty the stock was a bargain and he saw a lot of potential in the future of GameStop. It was also clear that Melvin Capital fraudulently naked short position, shorting more GME shares than were in circulation. A buy-mania of the stock would cause a price rise and a so-called short squeeze cause. The short-sellers then have to hedge by buying back the GME shares, which further escalates the price appreciation. This analysis was shared on social media channels, including on the forum of Wall Street Bets.
Wall Street Bets is a popular forum with now about 7 million mainly young investors who trade stocks from their smartphone with a trading app, such as Robinhood's. Furthermore, these young people are sympathetic to GameStop, a well-known video game retail chain, and dislike the big Wall Street investors. The members jokingly call themselves 'comrades' to emphasize that they are going to war against institutional big business like the investor rabble.
And this is what they did. All of these members eventually decided to take up the challenge by buying GameStop shares, which would put Melvin Capital and other GameStop short traders in a short squeeze and cause the price to explode. This strategy worked. Melvin Capital was in danger of going bankrupt because of this stock market explosion and the Wall Street short traders lost billions of dollars. Whereupon the institutions pulled the supervisors by the coattails to act against these wildly beaten youths.
The Nasdaq stock exchange threatened to halt trading in GameStop shares; furthermore, Robinhood and Ameritrade decided to restrict and further halt trading. Robinhood halted trading in GME and, among other things, automatically sold the positions of its users. The GME share price plummeted again. This caused a lot of bad blood and added fuel to the fire, showing once again that Wall Street is changing the rules of the game at the expense of the small investor. It will further motivate these young people to start undermining weak short positions of Wall Street institutions.
These young investors received a lot of support from the gold and bitcoin community; And it looks like a lot of capital will also move to the DeFi CryptoSpace where the market rattles through 24/7 without intervention instead of the stock market that is ultimately Wall Street's playing field. Tokenized versions of the GME stock were soon put on the FTX and Bittrex global Cryptocurrency Exchanges launched where they can now be traded 24/7.
The Robinhood app that supposedly sided with the small investor to democratize the world of finance has shown its colors. As a result, the company is sued and abandoned en masse by its loyal users. Robinhood has damaged its reputation for good. The real battle is best played outside of Wall Street's playing field and control.
Wall Street Bets and its army of retail investors have now set their sights on tackling the silver short position held by many investment banks and especially JP Morgan. The army of retail investors seems to have already started to walk on silver. The Silver price rose on Thursday within a short period of time by about 6.5% and shot up even further on Monday. Furthermore, they played with Dogecoin. It increased fivefold in value in a short period of time. Now there is also talk of taking the short position on Bitcoin via Futures which many Wall Street mutual funds have to deal with by buying Bitcoin en masse. Furthermore, Elon Musk and gave the signal last Saturday by posting Bitcoin in his Twitter profile. The Bitcoin price quickly shot up by 20%.
Hence, now it's time for silver the gold of the poor; and Bitcoin; the decentralized internet money of the people to make life difficult for Wall Street. Occupy Wall Street 2.0 has begun, now not with physical means, but with financial means.
Source: Bitcoin Daily
