The bigwigs trading stocks on Wall Street have been upset this week as billion-dollar hedge funds have been crippled by Redditors and memes. Not too long ago, the firm Gamestop’s shares were plummeting, and Wall Street veterans lined up a mountain of short bets against the company’s stock. However, members of the Reddit forum called “Wall Street Bets” discovered the short positions, and subsequently turned things around by purchasing the stock and placing long positions on Gamestop’s shares. On Tuesday, Gamestop’s stock (GME) spiked well over 148%, as GME trade volume outpaced the S&P 500 and almost every stock worldwide.
Wall Street Hedge Funds and Gamestop Shorters Suffer from Mega-Short Squeeze
Technological and financial decentralization has been quite a thorn to today’s central bankers and Wall Street veterans playing traditional finance games. This week, the ongoing fiasco with Gamestop’s stock (GME) is a tale that highlights how decentralized things are getting on the internet.
It all started when the subreddit “Wall Street Bets” invoked a thread about the “endgame” scenario for the company Gamestop. The retail chain has been hurting financially because of Covid-19, as malls are dead and people are shopping at Gamestop far less these days. Now Wall Street veterans and billion-dollar hedge funds decided to look at Gamestop like it was Blockbuster, and further chose to short GME shares significantly.
Despite the mountain of short bets, Redditors on the thread discovered the growing number of short positions, and decided to bring a “short squeeze” to the betting hedge funds and other high-net-worth Wall Street participants. The people who participated in the internet squeeze and the great number of Redditors on the “Wall Street Bets” forum pushed GME shares upwards by refusing to sell the stock for lower prices.
“It’s rapidly becoming apparent that we will soon enter the GME endgame. Before you can come up with an exit strategy or, if you’re still on the fence, decide whether to jump in, you need to form an opinion about the GME bull thesis, without considering the short squeeze,” one Redditor said.
"The market can remain long longer than you can remain short" – Julius Caesar
— WallStreetBets (@wallstreetbets) January 27, 2021
Melvin Capital Shorts Backfire, Bookies Bet Gamestop Will Tap $420 by April
One fund that took some extreme losses from this social media ‘Black Swan’ event was the multi-billion dollar hedge fund, Melvin Capital Management (MCM). The “Wall Street Bets” crew discovered that MCM had leveraged a short position worth over $55 million. Now MCM and the great number of Wall Street hedge funds have been the laughing stock on social media, as they have been ridiculed by Redditors and memes.
It seems Occupy Wall Street had the wrong approach.
— WallStreetBets (@wallstreetbets) January 26, 2021
Cryptocurrency supporters have also been criticizing the bigwig stock traders a great deal as well. Meanwhile, Nasdaq’s Adena Friedman told CNBC that the firm would be monitoring social media chatter and will halt stocks, if they match chatter with unusual activity in stocks. So far, Reddit’s day-trading squad has managed to squeeze an aggregate total of $80 billion from GME shorters.
It’s ironic to cryptocurrency proponents, that Bitcoin can take fear, uncertainty, and doubt (FUD), but Wall Street stocks cannot.
Nevertheless, the internet is calling the GME pump the “short squeeze of the century,” and according to the leading sportsbook Mybookie, the stock is likely to hit at least $420 by April 20, 2021. Additionally, reports also detail that someone even created a synthetic version of GME shares on the Ethereum blockchain.
The ETH/GME token has been trading on the decentralized finance (defi) exchange Uniswap, but some people are leery of this token as possibly being a scam. The blockchain explorer Etherscan shows there are 10 million ERC20-based GME tokens and currently, there’s been 293 “Wrapped Gamestop” token transfers to-date.
Moreover, a number of major stock trading platforms suffered massive outages on Wednesday morning, as exchanges like E-Trade, Robinhood, and TD-Ameritrade customers couldn’t access these platforms. Reports also said that Fidelity Investments and Charles Schwab were also being affected by the GME price surge.
What do you think about the short squeeze of the century? Let us know what you think about this subject in the comments section below.
from Bitcoin News https://ift.tt/3cgwDWR
