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GameStop, Silver & Bitcoin An Outlet For Collective Rage

Published by Victoria Collette Jones on June 6, 2021

As part of my interest in Bitcoin, I follow the financial news. The last week of January 2021 turned out to be very exciting. A group of investors on a Reddit forum – Wall Street Bets, had some months prior, discovered a weakness in the trading of a major hedge fund. 

This hedge fund – Melvin Capital held a substantial short position in relation to GME – the ticker symbol for a chain of retail gaming shops called GameStop in the US. Although the company appeared to be in good shape with strong cash reserves. By taking a short position at a level of 130%, the hedge funds appeared to be prematurely anticipating, if not ensuring the company’s untimely collapse.
 
The smart investor who spotted this weakness highlighted it to a number of other companions in the Wall Street Bets conversation. Before long they had persuaded a number of other Redditor investors to follow them into taking a long position against the shorts, effectively a ‘short squeeze’. With the net effect of creating serious financial difficulties for the hedge fund that held these short positions.
 
Distressing stories of hardships experienced during the 2008 financial crisis and the effects on parents and families. Tales of lost jobs, homes and businesses filled the forums as the emotional outpouring and passion for revenge egged on the little guy, for each of them were ‘David’ finally bringing down the ‘Goliath’ of the financial markets that had harmed them for so long.

As the momentum for this trade expanded and the share price grew beyond all expectations, millions of eyes were drawn towards this tiny little corner of the Internet that was about to bring down one of the big guys. Or so they thought.

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