The heavy hitters in traditional finance have been worried about recent stock market conditions driven by Redditors and a large number of retail investors. Goldman Sachs executives warned this week that if these short-lived squeezes continue, they may “make it worse.” In addition, Interactive Brokers founder Thomas Peterffy made similar comments this week, saying These types of systemic risks “in theory can destroy the entire system.”
Wallstreetbets trend may “snowball through the market”
So far, 2021 has been a very interesting year, and a forum called r/wallstreetbets on the Reddit forum this week triggered a whole new hot topic. Four days ago, news.Bitcoin.com reported in the stock market fiasco that it started with a brief squeeze of Gametop (GME) stock. However, as the Wall Street (WSB) trend begins to seep into many other types of stocks, GME is not the only stock to be promoted.
For example, Russell 3000 Index (RUA) stocks become target stocks, which include stocks such as NOK, GOGO, AMCX and FIZZ. The social media boom has even penetrated the cryptocurrency world, pushing up coins such as Dogecoin and XRP. According to statistics from Ortex, a financial data analysis company, it is estimated that the hypothetical short sellers have lost a “short position of 70.87 billion US dollars.”
An analysis by Zerohedge shows that Melvin Capital lost $7 billion in 2021. “The report stated that Melvin Capital lost 53% in January and Gabe Plotkin (former SAC portfolio manager) lost more than $5.3 billion in one month.” Note.
The Financial News Channel has also been reporting another wave of WSB trends that took place last week, as short-squeezers hope to squeeze the silver market. A clue on r/wallstreetbets suggests that the power of the masses may drive down the price of silver from $25 to $1,000. Zerohedge has been reporting on trends that indicate that Redditors and social media users are trying to generate demand for silver.
The financial reporter revealed: “In the 24 hours before the market closes on Friday, SD Bullion sold almost 10 times the amount of silver we would normally sell during the entire weekend leading to the opening of the market on Sunday.” “In the normal market. If we exceed the long position (the number of ounces we expect to sell over the weekend), we can usually find at least one supplier/source that is willing to sell some ounces over the weekend.”
In addition, polygon.com writer Owen S. Good (Owen S. Good) reported this week how the stock rally driven by memes saved AMC Cinemas’ $600 million in debt. The Meme Lords and Redditors saved the business, not the US federal government, not the bankers. These groups are actively making AMC flush to the toilet. The author’s report explains: “When private equity firms trade company IOUs for stocks, the theater chain will gain an unexpected lifeline,”
r/wallstreetbets is now the world’s largest hedge fund.
Except for complete decentralization and complete democracy.
In addition, Zerohedge’s notorious Tyler Durden wrote an investor report on Goldman Sachs executive David Kostin. Durden wrote that the latest Goldman Sachs report warned: “If short-term tightening continues, the entire market may collapse.”
“In the past three months, the most short-selling stocks have risen by 98%, surpassing the major short contractions in 2000 and 2009,” Costine’s research details. Goldman Sachs analysts added: “This week it was shown that an unsustainable surplus in a small part of the market could overturn dominoes and cause greater turmoil.”
Durden from Zerohedge said that Goldman’s hedge fund VIP list dropped 4% during the WSB fiasco this week. David Costine of Goldman Sachs concluded: “In recent years, crowding, low turnover and high concentration have been consistent patterns. This increases the risk that the relaxation of a fund may snowball in the market.” Durden uses a different approach. Explained Kostin’s final conclusion.
The author wrote:
Translation: If WSB continues to push the shortest stocks higher, the entire market may collapse.
Interactive Brokers Chairman: “In theory, it can destroy the entire system”
Goldman Sachs executives are not the only financial giants weighing stock market craziness and possible consequences. Thomas Peterffy, founder and chairman of Interactive Brokers Group Inc., discussed his crazy ideas about the stock market in an interview with Marketwatch financial writer Mark DeCambre.
DeCambre said on Thursday that Peterffy explained that the short squeeze could last a long time unless it stops. DeCambre also wrote that Peter Fei is concerned about systemic risks and the “potential” of this trend “to fluctuate across the market.”
In an interview with DeCambre, Peter Fei emphasized: “In theory, it may destroy the entire system.” The founder of Interactive Brokers elaborated: “There is no reason why it cannot last indefinitely.
I will be @business 4:20pm EST, discuss memestock, gameton, robinhood, bitcoin, dogecoin, papaya musk and where we go from here
At the same time, since the viral spread of WSB vs Wall Street has included almost all social media conversations in the United States, many cryptocurrency enthusiasts have been cheering the WSB trend. Merten De Mills, The CSO of Coinshares, the largest digital asset management company in Europe. She manages $3 billion in assets (AUM). She explained the recent turbulent situation in the stock market.
“In essence, this week’s events involve freedom of speech, censorship and power. We are witnessing the fastest aggregation of power in human history.”
“As our lives become more and more dependent on digital media,” Demirors continued. “Powerful entities like governments and companies are also capable of censoring our rights to freedom of speech, assembly rights, protest rights, etc. The unprecedented power struggle, what we see is a control battle. Coinshares CSO added that it Has played a role in the political arena, and is now playing a role in financial markets, financial media, fintech platforms and social media.
In addition, on January 29, the cryptocurrency trading platform Bittrex Global revealed that it is listing tokenized stocks, which are many stocks that the WSB trend has affected. The exchange detailed the reasons for making this decision because Bittrex wants to “ensure that retail investors can trade the stocks they want to trade on any day of the week.”
The cryptocurrency exchange also plans to list any other mainstream stocks that other financial trading platforms may review in the future. Newly listed tokenized stocks on Bittrex Global include Gametop (GME), AMC Entertainment (AMC), Blackberry (BB), Nokia Corporation (NOK) and Ishares Silver Trust (SLV). However, because Bittrex Global has geo-blocked U.S. citizens who visit the portal, U.S. residents cannot participate.
“Bittrex is regulated in Lichtenstein and Bermuda, so American investors may not be able to trade these securities, but if other jurisdictions are interested, other jurisdictions can also trade these securities.”
What do you think of the recent Wall Street (WSB) trends and the warnings by Goldman Sachs and Interactive Brokers executives that there are systemic risks in the traditional financial system? Let us know your thoughts on this topic in the comments section below.
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