GameStop short squeeze highlights the power of decentralization

GameStop short squeeze highlights the power of decentralization

The success of the GameStop Short Squeeze in pushing the price above $ 370 – and the response of centralized authorities and markets to it – has, according to some in the crypto industry, underscored the need for decentralized funding.

The stock, which traded at less than $ 20 per share earlier this month, was viewed by members of the r / WallStreetBets subreddit as being attacked by a hedge fund that had disclosed a large short position in the stock.

As a result of the pump, coordinated on Reddit and run by individual traders through platforms such as TD Ameritrade and Robinhood, hedge fund Melvin Capital Management lost a total of $ 3.75 billion because it had to close its massive short position on GME.

Various centralized trading platforms have now put limits on how stocks can be traded, and the president of NASDAQ – the stock exchange that GME is listed on – suggested temporarily suspending trading in stocks that internet users are deliberately targeting to give investors the opportunity give, “recalibrate. “

Eyebrows were also raised when the subreddit behind the brief squeeze, WallStreetBets, was temporarily taken offline and its Discord channel suspended, apparently due to content moderation issues.

The crypto community has been fascinated by how traditional markets resemble crypto markets, only worse.

At some point these R / Wallstreetbets guys will find out that BTC is the biggest financial protest

– Haralabos Voulgaris (@haralabob) January 27, 2021

Mike Novogratz, CEO of digital assets management company Galaxy Digital, compared what happened to GME to “a huge endorsement from DeFi” on Twitter, calling it “a revolution that began with people who didn’t trust the central authority” . He also drew comparisons between the Reddit-based movement and the current social climate of inequality that has gripped the US and many other countries in recent years.

3) These are all symptoms of growing inequality that is making our markets, political system and civil society more fragile than in my life.
it makes my crypto more bullish, but more importantly, more focused and dedicated to system changes.

– Mike Novogratz (@novogratz) January 27, 2021

SkyBridge Capital’s Anthony Scaramucci, who owns approximately $ 385 million worth of BTC, agrees that recent GME-related events have had a positive impact on Bitcoin’s future, telling Bloomberg that they have “more evidence are that Bitcoin will work “.

But not everyone was impressed, including CNBC’s Jim Cramer, who downplayed the importance of the event in a recent episode of Mad Money.

“As fun as the moves are, this stuff is just a sideline,” Cramer said. Ultimately, I don’t think a Reddit forum can bring down the house. “

“They select undervalued stocks, open large short positions and run them. That can cause insane moves on a handful of stocks, but it’s not enough to move the entire market. Come on.”

GameStop’s staggering surge resulted in FTX derivatives and futures specialists listing a token version of GME futures for trading in cryptocurrency-based collateral last night. FTX’s inclusion of GME comes at a time when platforms like TD Ameritrade and Robinhood are restricting trading.

The price for GME opened at $ 354.83 on Wednesday, up 140% overnight.

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