Was the standoff between Reddit and Wall Street last week really “the beginning of the end for centralized funding,” as Gemini founder Tyler Winklewos described it? Or is this just a one-time example of people coming together to correct an alleged mistake – without long-term financial consequences?
When GameStop, a stranded video game retailer, was attacked by hedge fund sellers, a coalition of individuals led by r / Wallstreetbets, a Reddit forum, rushed to GameStop’s aid, buying shares and lifting the stock from $ 20. Another one. As much as $ 483 – and hurts card dealers in trading.
But then Robinhood, the rebels’ favorite trading platform, suspended purchases of GameStops GME and seven more. Redditors shouted and claimed that Robinhood had surrendered to hedge funds and other Wall Street stakeholders. Robinhood, for her part, made it clear that she needed to stop buying GME or she ran out of funds to cover transactions.
However, more than 30 class actions have been filed against the central trading platform – one complaining that the suspension is exactly what the hedge funds [GME short selling] wanted, and the other that “Robinhood stole from the poor to distribute to the rich. ”
Others have suggested that this kind of deception would not take place in the decentralized financial world. In that line, Galaxy Digital’s Mike Novogratz described the GME outbreak as “huge support for DEFI,” and a crypto user who requested anonymity told Cointelegraph, “Preventing individual stock purchases by individuals is a form of centralized oversight. Mechanism No one needs this power in a decentralized trading market. ”
But this opinion was not unanimous. Quantum Economics co-founder Matt Greenspan found little applause for the group purchase of GameStop shares: “The story of Main Street finally beating Wall Street at its own game is very misleading,” he said. “It was boxing.” see how buying high-value shares in a company that is losing money can make the world a better place, ”he continued.
With that as background, here’s a deeper look at the lessons, if any, to be learned from r / Wallstreetbets’ opposition to quotas. For example, if retail investors can now change the prices of stocks, they can definitely change the prices of large cryptocurrencies, right?
The writing is on the wall?
“The GME and Robinhood events were a wake-up call to a wider audience,” Alexey Zamyatin, co-founder and CEO of Interlay, a blockchain interoperability research firm, told Cointelegraph: “The GME and Robinhood events were for Awakening a wider audience,” and added: “ I doubt most people outside the finance / banking department know that Robinhood’s most important clients were hedge funds, not retailers. ”
“I’m not entirely sure I agree that the recent GME saga has shown that retail investors can benefit from coordinating long-term stock transfers,” George Juggles, CEO of the Future Institute at the University of Nicosia, told Cointelegraph. … “I see this as evidence that the market was overshot at a late stage, rather than the new wave of sustained retail dominance that many commentators want to portray,” he added.
“In theory, a typical retail audience can transfer many assets,” including cryptocurrencies – but of course it depends on the size of the audience, Kag Borchardi, president of BCG Platinion Netherlands, a division of the Boston Consulting Group, told Cointelegraph. … The Reddit / Wallstreetbets forum reportedly has mobilized thousands of individual investors to buy GameStop stock. “Overall, I think the number of retail investors in the cryptocurrency space will continue to grow – whether or not they merge like GameStop,” Burchardi said.
Historically, private investors, not institutions, have paid prices for cryptocurrency, Lex Sokollen, head of marketing and global co-head of fintech at ConsenSys, told Cointelegraph, adding:
Their risk tolerance was higher, and the coded story attracts more people in search of a new system. DeFi has placed retail and institutional capital at last year’s levels, which will be key to moving forward. ”
But what about the parties involved in last week’s garbage. Mark Cuban, owner of the Dallas Mavericks Corporation, suggested that “the old-school investment community is currently launching what it describes as a ‘value store’. “Is this a battle between young and old?