WallStreetBets and what it tells us about the moment

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The traditional financial market, especially the stock market, turned upside down two weeks ago, when retail investors organized themselves on the Reddit social network and combined to act in a position contrary to the hegde funds that were operating sold and leveraged. shares of Game Stop, a video game company that is struggling to keep up with the growth of the online gaming trade.

The massive purchase by retail investors forced some funds that were sold to repurchase their positions, causing the so-called Short Squeeze, forcing the sharp rise in prices.

With the task force, Game Stop's stock exploded, rising by more than 2000%, making some investors millionaires and causing serious losses to others.

This is what happened with the hedge fund Melvin Capital, managed by Gabe Plotkin, an experienced manager who had to rely on the help of managers from other funds to mitigate losses.

In January the fund reported a 53% loss due to sale bets on Game Stop and other companies. The manager started the year with $ 12.5 billion and now has about $ 8 billion.

Probably other big investors were behind the movement that generated all of this, but what caught the most attention were the efforts to try to prevent the losses of the big players.

The broker Robinhood (with its famous app) interrupted the trading of Game Stop shares, preventing retail users from trading it, while it seemed to save billionaire friends from hedge funds.

Some points in this event draw attention:

• The movement is a reflection of the Fed's own monetary policy, of “helicopter money”, which flooded and will further flood the market with liquidity, a world swimming in debt, negative interest and fiduciary currency losing more and more value. - All of this tends to cause more distortions like this in the future.
• Market manipulations have always existed, but now they have surfaced because they were made by retail investors, when they are usually carried out by billionaire hedge funds.
• The event left the degree of leverage that the American financial system operates, since the funds usually operate sold at very high levels.
• This can attract even more attention to Bitcoin and solutions such as decentralized exchanges, where there is no censorship and impediments for those who want to trade, regardless of time or level of volatility.

It is inevitable that, as confidence in institutions continues to crumble, gradually more people start to turn to Bitcoin.

Max Keiser said:

The reason for wich WSB, Reddit and Squeezesilver should focus exclusively on Bitcoin is that Bitcoin is the best and strongest money of all time and, once it wins again the fiduciary money and becomes it to turn it up, it becomes it to become it. A permanent social change wehere the Central Bankers and the poverty and violence that they promote will be deleted from our lives.

Of course, situations like this can be dangerous and can cause systemic damage, since a large part of the money managed by these hedge funds is from pension funds and part of the wealth of many families.

Should such situations become recurrent, this could cause serious imbalances in the economy.

The scenario is much more complex and goes beyond reddit. We must analyze what is happening in the macro scenario and in doing so, it seems that all paths lead to Bitcoin.

Posted Using LeoFinance ^Beta