TL;DR: Markets are pumping.
Traders are becoming aware of the value of hard assets. Crypto stands to benefit immensely. Are you ready?
What a rough week for the markets — GameStop’s ($GME) market cap jumped by over $20 billion in less than a week following a short squeeze of epic proportions. Rumor has it they’ll even offer an extra five cents on any redeemed games.
The $GME squeeze allegedly has a lot to do with retail traders using the subreddit WallSteetBets. The crowd used their $600 stimulus checks to pump GameStop’s stock to the moon subsequently.
The squeeze has already bankrupt one hedge fund, thereby sticking it to the Wall Street cronies!
Nobody is asking how a small handful of Redditors knew about short and gamma squeeze opportunities. Neither is anyone wondering how they had access to a Bloomberg Terminal.
Or why some were so willing to drop tens or even hundreds of thousands of dollars into a meme.
Strong narratives prefer simplicity, not skepticism.
There’s much psychology at work regarding how markets function, who makes the markets, and where the money flows.
Retail trading apps like Robinhood and TD Ameritrade have restricted users’ access to $GME and other highly volatile stocks involved in the pump. This move gave beleaguered hedge funds a bit of breathing room.
Retail traders are pissed.
Questions surrounding conflicts of interest and market manipulation are plentiful, with class-action lawsuits flying. The Redditors are already plotting their next target to pump into oblivion in retaliation for this presumed favoritism.
The world’s largest silver ETF, $SLV, has a target on its back.
It’s a daring move. The highly accoladed Reddit post outlines the logic of the potential $SLV pump. It sites silver’s inflation-adjusted price as a significant reason for its current undervaluation.
The post also mentions the fines that JP Morgan has paid over the years for silver market manipulation. Never mind that JP Morgan’s COMEX silver depository is the third-largest holding of physical silver in the world.
Again, narratives like simplicity.
This retail outrage is both a money and a head game. Historically, people flood into hard assets like gold and silver during times of crisis to hedge against inflation and uncertainty. The incoming $SLV pump is “sticking it to the banks and hedge funds” as much as it’s a move into safe assets during times of massive economic, political, and social uncertainty.
After all, Jerome Powell wants more inflation, and the Fed Chair gets what the Fed Chair wants.
At the same time, a new generation of day traders is flooding into the markets. Over half of Gen Z’s are living with their parents.
Young people have to get their dopamine fixes somehow, and volatile markets are a great option in a world of stay-at-home orders and social distancing.
Combine the desire for safety and hunger for speculation, and you end up with a new potential target: digital assets like Bitcoin.
The crypto markets have already had a taste of Reddit’s market interest — Dogecoin pumped over 500% last week before cooling off and shedding the majority of its gains.
For the time being, this is mostly hype, but Bitcoin breaking previous all-time highs is nothing to shake a stick at. Commodities naturally correlate with inflation, and Bitcoin isn’t called a synthetic commodity for no reason.
Bitcoin and other crypto-assets will invariably face the same supply crunch of physical silver, with or without the Reddit bros.
Eventually, hype gives way to fundamentals, and in today’s environment, no asset class is more fundamentally sound than crypto. Dogecoin’s meteoric rise and fall was just a taste of what is to come. PayPal recently allowed users to buy crypto. Visa is getting cozy with the technology, especially stablecoins. Liquidity is rapidly on its way.
If you’re involved in the industry, you want your project to be fully prepared for the moment that all eyes are on crypto. Bad gateways, dead blogs, and dusty documents are a terrible look. Need a hand?
HeavyZen is here to help.
We have a full suite of services, including content creation, social media management, and content marketing.
Reach out today. Let’s talk about how we can help better prepare your business for the coming tidal wave of investor interest.