This week was one of the more wild weeks that we have ever seen in equities and the financial markets. If you’re not already familiar with the Gamestop situation, a group of retail Reddit traders decided to have some fun with some of the most aggressive and disliked hedge funds in the country this week. After discovering a vulnerable short position on Gamestop stock, Reddit investors began buying the stock en masse in order to force the hedge fund to either cover their short position or risk going bankrupt. Melvin Capital was the target of this attack, and while they will not be going bankrupt, they did lose billions of dollars in their heavy short position.
However, it seems as though hedge funds and brokers have each other’s back. When Robinhood and other popular brokerages noticed what was going on, they quickly halted the buying of GME and cited “safety concerns” for their investors. Clearly, even Wall Street things very lowly of the retail investor and believes that they must be babysat for their own protection, similar to the way that the government closes investments to certain groups of people.
Their gambit to stop the price of GME from going up may have worked in the short-term, but they also may have created a monster in the making. Millions of people have seen what happens when you challenge the financial system and they are not pleased. Many are speculating that this weeks’ events could lead to a financial market revolution unlike any other one we’ve ever seen before. These investors could flock to cryptocurrency markets. The main attraction for these markets being that they are open 24/7, not beholden to any country, and far less restrictive.
Regardless of what the actual impact is on the cryptocurrency markets, the events of this week undoubtedly vindicate investors that have expressed concerns in the past about corruption on Wall St and the need for a fully decentralized system, like what many cryptocurrencies are trying to create. Coincidence or not, cryptocurrency markets are continuing to rise this week to new highs.
