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GameStop, Dogecoin and Crypto: Making Sense of The Wild Current Financial News - Blockchain.News

GameStop, Dogecoin and Crypto: Making Sense of The Wild Current Financial News

I have been watching the exploits of the rag-tag group of Reddit traders who have upended Wall Street's status quo. As an investor, the absurdity of both Wall Street and Reddit is apparent. I will continue to support open and decentralized platforms like Bitcoin. Here is my take on where we go from here.

Unless you've been living under a rock for the past week, you've heard about the exploits of a rag-tag group of Reddit traders who have upended the status quo of Wall Street.

GameStop, Dogecoin and Crypto: Making Sense of The Wild Current Financial News

I've been watching these events unfold from Dubai with equal parts wonder and glee. As a professional investor, the absurdity of both Wall Street and Reddit is apparent.

From the crush of Gamestop investors to the meteoric rise of Dogecoin (one-time joke crypto based on a meme), one thing is clear: we're in uncharted territory. Here's my take on where we go from here.

Wall Street Got (Deservedly) Screwed...And Made Things Worse

Everyone with even modest exposure to high finance knows that the professionals can access better information and more sophisticated strategies than any small-time retail investor. Investing, on balance, is anything but a level playing field.

For too long, the elites have assumed that the little guys will simply follow their lead and provide liquidity when needed. Of course, it's never wise to bet on asymmetrical information in the long-run. Eventually, people catch on and set up their own "gotcha" moment.

All is fair in love, war, and investing, and if Wall Street had taken its licks and gone back to business as usual, I'm willing to be that the story would have been forgotten in the next news cycle.

That isn't what happened. Instead, Wall Street decided to take the cry baby approach and move the goalposts when they lost. This move didn't go unnoticed, and chaos understandably ensued.

And The Pendulum Swings

Naturally, the response from people, pundits, and politicians was swift and overwhelming. The masses deepened their distrust of Wall Street and gained newfound confidence in their ability to (seemingly) move the markets.

The problem here is that chaos thrives in the presence of irrational exuberance, and things get out of hand. Somehow, the GameStop Redditors' machinations have morphed into a bull market for Dogecoin (literally a joke cryptocurrency). Adding fuel to the fire are people like Elon Musk, who have demonstrated the ability to initiate massive moves in the market by merely changing a Twitter bio.

Now, we see trades that make the late 90s tech bubble look conservative. How does this play out? The same way it always does, with the little guy getting squeezed. Yes, David gave Goliath a very-much-deserved black eye. However, that doesn't mean that he's sparked a revolution.

How I See Things Playing Out

For the most part, history is a game of inches. Much like the markets, trends ebb and flow until they reach a tipping point. I believe that we're witnessing one of these flow moments, and it will eventually subside. However, there are significant trends that can, and should, draw on going forward.

I've been a longstanding advocate of Bitcoin because it's radically open and decentralized. The populist momentum that drove the pump and dump schemes behind Gamestop and Dogecoin will outlive the passions of the moment. Bitcoin, unlike many other cryptos, represents a reliable and fundamentally strong vehicle for a decentralized future.

The professional class of investors, of which I am undoubtedly a member, should also be mindful of history's lessons. If the Trump years taught us anything, it's that populist uprisings are both challenging to quell and damaging to the long-established status quo. Sometimes, the changes that they bring about are positive, but more often than not, they result in increased division and inequality.

If we want to see a more equitable and profitable future, Wall Street must move toward a more inclusive and fair model. If they continue to move the goalposts and play cry baby when their well-established tactics are used against them, they're only going to deepen the divide.

I'll be doing my part, continuing to support open and decentralized platforms like Bitcoin well into the future.  

Image source: Shutterstock
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