Shareholders in video game retailer, Gamestop, have had a fantastic week, especially the top three thanks to a “frenzied dual between Wall Street traders and small investors, “ as The Guardian reports. Please note that it’s a story so big that has hit the MSM as well as the crypto media.
On Wednesday, the company shares hit a fresh “52-week high of $354.83, making the 13% stake held by Ryan Cohen, 34, GameStop’s largest single shareholder, worth more than $1.3bn.” CNBC reported that Cohen’s wealth increased an average of $90m a day, or nearly $4m per hour over the last two weeks. The other two major shareholders, Donald Foss and George Sherman made $500m and $350m respectively. Let’s not forget that the stock was trading at less than $20 per share earlier this month. However members of a subreddit group believed Gamestop stock was under attack by a hedge fund that had disclosed a large short position in the stock.
For these small investors the action took place in a Reddit chat room called r/WallStreetBets, where they organised their strategies, their aim being to beat Wall Street traders and funds, such as Black Rock, which holds Gamestop shares now valued at $3 bn. The subreddit members coordinated a pump action on the stock on Reddit, which was executed by individual traders using platforms like TD Ameritrade and Robinhood.
What happened is that these subreddit small investors poured their money into the retailers stocks, while the hedge funds, which had been betting against Gamestop ultimately lost billions. The action became so heated that even the Biden administration announced they were monitoring it.
Over at Cointelegraph, the commentary is focused more on the implications for decentralization. It says, “The success of the GameStop short squeeze in pumping the price above $370 has highlighted the need for decentralized finance, according to some in the crypto industry.”
Why are they talking about decentralization? Because, “Various centralized trading platforms have now put limits on trading the stock and the president of NASDAQ — the exchange on which GME is listed — suggested that trading could be temporarily halted on stocks deliberately targeted by internet users, in order to give investors a chance to ‘recalibrate’.”
Anthony Scaramucci of SkyBridge Capital, believes these recent events surrounding GME are good for crypto and especially bitcoin. He told Bloomberg, it was “more proof of concept that Bitcoin is going to work.”
Furthermore, thanks to activity by derivatives and futures specialists FTX, which has listed a tokenized version of Gamestop futures that can be traded against crypto collateral, the price of GME opened at $354.83 on Wednesday, representing a 140% gain overnight. Keep an eye on this story, as it could be the beginning of something very interesting.