Following an interesting last ten days of headlines, Wall Street appears to be a mess, the retail investors are taking over, and trading stocks has become a joke. Bearing this in mind, will everyone move to crypto after the recent Wall Street saga? Let’s take a look at some possible outcomes. What’s The Recent Wall Street Saga? Perhaps you have been living under a socially distanced rock or been too deep in TikTok – no, wait, even TikTok blew this story up. We’ll give you a recap before MGM and Netflix sink their teeth into it, which they allegedly already have.
The story centres around amateur Reddit users beating Wall Street Investors at their own game. The group of day traders on a Subreddit amply called Wall Street Bets engaged in stock spikes, short squeezes, and diamond hands, taking advantage of Wall Street hedge funds that were betting on Gamestop’s stock going down. If you’re betting on the stock’s going down, you’re in for a rude awakening if they start to go up, and by rude, we mean serious losses. It all started a year ago when a user on the Subreddit announced that he thought that GameStop – a video gaming retailer – was undervalued. The community joked about taking over GameStop.
Then the joke took on a life of its own. Buying GameStop calls became a meme, and the next thing you know, they’re doing it. The price went up a whopping 2,600% in just a few days. It halved in value before bouncing back to $147.98 the next day. A pump and dump and pump, obviously everyone is waiting for the next dump to take place. It is believed the short-sellers on Wall Street lost around $19 billion. The Reddit community also targeted AMC, experiencing gains of over 900% and Blackberry and Nokia.
Following this, several online brokerages, where the retail investors were accumulating the calls, limited the trading on the GameStop stocks. This set the Reddit community up in arms, so we should be in for an interesting year ahead. It is believed that the isolating due to the pandemic has made many people become a trader. This large influx in people understanding the market has created an interesting dynamic of internet mob versus the Wall Street professionals. It could be a tail of the poor stealing from the rich, but we’re not entirely certain that there aren’t rich and poor people on both sides of the equation.
So, Will, Everyone Move To Crypto Now?
We’re quite used to a classic crypto pump and dump (remember last year when TikTok pushed Dogecoin up by 140%), but less so on Wall Street. So following the Wall Street drama, do you think it’s likely that retail – ahem, Reddit – investors will look to do the same thing on crypto? Turns out they already have. Gunning for Dogecoin again, the mob drove the price up 900% from an initial value of $0.0078 to a new all-time high of $0.078. For the first time since 2015, Dogecoin joined the top 10 cryptocurrencies based on market cap. And then came the sell-off. The coin then shed 71% of its value, causing some investors to lose. That’s not all; the wild bunch then set their sights on XRP, driving the price up to 86% on Saturday.
Rising from $0.28 to $0.51, XRP then corrected to $0.41 following the usual mass sell-off. As pumps and dumps are technically illegal, it will be interesting to see how this will play out. Several people in congress, as well as the SEC, have indicated their eyes are on it. Will Wall Street investors now look to crypto with more certainty? Who’s to say? But the chances seem likely. With the mass institutional investment into Bitcoin last year, Wall Street investors were forced to look at crypto in a different light. And many have taken to incorporating cryptocurrencies into their investment portfolios, be it for their companies, personal or clients’.
Never A Dull Moment
Technically, this story is still unfolding, and you’ll probably want to make some popcorn for this one. With a bunch of wild retail investors causing havoc – as well as great returns and losses – it’s anyone’s guess where this might go next. Stay tuned, and we’ll keep you posted.