Bitcoin Launch Commencing | Reddit, WSB, GameStop, Tesla, and Crypto

As the dust settles following the recent Reddit, Gamestop, and Robinhood drama this past month, much is still up in the air and many questions burning in the minds of spectators and traders alike. The uproar from Wall Street can be seen as comical, as they echoed extreme statements comparing Wall Street Bets (WSB), a popular investing subreddit, to capitol riots, calling for regulation to restrict retail traders and their outlets to invest, and equating the WSB community to Mavericks driven by greed who will ultimately get hurt. This is the wrong perspective.

Retail investors, in the case of WSB with GameStop, were operating along a similar philosophy that Wall Street has enjoyed for decades. It could be argued that it takes more gall and bravery to act on information available in a public forum instead of closed-door “idea dinners.” The barrier to entry for retail investors is ATLs with easy-to-use trading apps, helicopter money from the government, and favorable yield curves inspiring new investors in droves to open accounts and start trading.

This injection of doubt into the traditional finance space could be a catalyst for a future bull run in the crypto world.

Coupled with Tesla’s recent 1.5B commitment to Bitcoin, the tides are changing. Elon has openly shown his detest for short positions on Twitter time and time again, as massive short positions were running his company into the ground. It seems all too convenient that his entry into BTC intersected with over 1 billion in shorts managed mostly by large hedge funds, 50% of which is now liquidated. Elon wanted to land a blow.

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It can be easy to draw similarities between the grassroots movement that has been driving crypto adoption and the recent action of the WSB community.

Emerging Themes

The core driving methodology for many among the WSB community was deep-seated anger. Millions of people witnessed their family and friends get pushed into destitute conditions following the housing market crash in 2008, while they watched funds get bailed out. This is still tender today and the lasting implications, pain, and downstream consequences are generational.

The GameStop position was more likely a trigger, due to the wide-spread frustration of a set of opaque rules and regulations typically skewed to favor the seemingly immutable elite, among many more grievances. Despite the primary driver of action with crypto and WSB being different, an underlying dichotomy is present in both movements, a conflict between new and old financial thinking.

Much of the initial adoption of cryptocurrency was driven by rejection and lack of confidence in the traditional financial system, the allure of eradicating intermediaries and decentralizing power, and its potential use-cases in geopolitically uncertain climates and cross border payments. Crypto has had a slow initial adoption and naysayers rejecting the idea of a programmable token holding value and possibly producing yields were ubiquitous.

Despite the efforts of the WSB community, this dramatic “squeeze” will likely not repeat itself to the same extent. The vulnerability that WSB capitalized on, being massive 100+% short positions, has been recognized and funds will likely cover their bases in the future. This has however driven home the message that things may be changing.

What This Means For Crypto

For cryptocurrency advocates and early adopters, the GameStop events are all too familiar. A grassroots movement, not driven by institutional investors and massive conglomerates, but through humble beginnings in intimate social media circles as a way to combat the “man.” The WSB vs. Hedge Fund drama could serve as a window into a possible future where decentralized markets are the norm; where the power isn’t necessarily always concentrated with the winners.

Will there be another “short squeeze” at the hand of the WSB community? Who knows. The WSB community has nearly 4x since the start of 2021 and massive short positions still exist.

Despite some controversy regarding shorting in the markets, it is a healthy process. The consensus among financial analysts is that it is ethical, despite the apocryphal belief that it profits on dying companies. It can create a “bottom” where short sellers buy back the shares and prevent the share price from plummeting even further. The controversy lies in taking massive short positions of over 100%, or in the case of GameStop, 140+%. This is the critical metric the Reddit army leverages to determine potential profitability and their next “attack” — short interest.

Robinhood, one of the driving forces behind inspiring and enabling retail investors to join the space and also the subject of the recent controversy restricting its users to buy “meme stocks,” had cost Reddit users millions in lost value had they still been able to trade unrestricted.

Perceptions on this are still controversial, but the popular sentiment still appears to reside with the WSB community, and fears of over-regulation may still be in the cards. These restrictions from the “powers that be” cannot be imposed upon a global decentralized network, like Bitcoin or Ethereum, where tokens are sold and purchased without intermediaries. Sentiments surrounding crypto are becoming increasingly more positive and optimistic.

Ethereum recently recorded some rapid growth amidst the GameStop saga unfolding, and calls for accelerated adoption of crypto and DeFi are saturating the space. This coupled with institutional money holding onto their capital amidst regulatory uncertainty following the recent administration change in the US — we can’t help but have our minds race to how this could unfold.

Could BTC be the next Reddit short squeeze? You would hope to be a holder if it is.