By Gabriel Negrin
“I am not a cat.”
“I like the stock.”
These words were uttered by Keith Gill, aka Roaring Kitty, aka DeepFuckingValue. Words that would have been powerless had they not been shared in a congressional hearing.
What is a Redditor doing in front of U.S. Congress? Well, Keith is sort of a de facto leader of the Reddit community WallStreetBets — even if he doesn’t consider himself so.
Keith is now being accused of manipulating the market. He argues that large hedge funds were over-shorting various companies. While many consider it unfair and even undemocratic that Keith had to go to Congress, there is a silver lining to this event:
GameStop and WallStreetBets accelerated a process that started with crypto
Bottom Line: The economy has never been this democratic.
Here’s why I believe the process of democratizing the economy has just started.
r/WallStreetBets v. Big Hedge Funds
Unless you are hiding in an underground bunker with no communication with the outside world, you are probably aware of the WallStreetBets story. If not, let me try to explain it in a nutshell starting with the GameStop case.
Keith Gill, known on Reddit as u/DeepFuckingValue, had been researching GameStop since 2019. He had every reason to think that large investment firms had oversold GME stock.
And he was right. GME was oversold by 120%.
His solution? He went all in.
In other words, whenever he had the chance, he increased his investment position. And as his position increased, he gained popularity.
WallStreetBets embraced and supported him with every action he took. The result? A company on the verge of bankruptcy (GameStock) saw its stock soar sky high.
But the market is relentless.
If someone wins, somebody else has to lose.
And this time, these big hedge funds were the ones holding the bills.
Their shorts were squeezed. And then things became complicated when these large firms began accusing the subreddit of manipulating the market.
Robinhood halted trading and closed positions without users’ permission. A war was about to start.
The War In Motion: Diamond Hands v. Shorters
Hands as strong as diamonds that promised to hold their positions without selling.
Do you see the parallels between diamond hands and crypto hodlers? Here’s how the story went:
- Large hedge funds betting on bankrupting a company in a declining industry.
- The influence of these funds clashed directly with the willpower of hundreds of thousands of Redditors, the latter winning the support of virtually everyone on social media.
But, then problems began to occur with the brokers. Many paused trading due to a lack of liquidity. Others simply closed positions of their users to “reduce risk.
It got to the point where CNBC’s financial reporter Jim Cramer started telling investors to take their profits and walk away.
And then this entangled situation became even more complicated.
The Congress And The War Aftermath
DeepFuckingValue had to stop posting his daily updates on Reddit. He knew it was best to wait to get out of this complex situation before continuing.
The next step was Keith Gill’s congressional appearance. Reddit, Melvin Capital, and Robinhood directors also had a say.
So while there is no obvious winner in this scenario, there are major benefactors.
Roaring Kitty was able to post another update. This time, he doubled his position. Of course, had he sold any shares, he could have been accused of running a pump and dump scheme.
The CEOs of Melvin Capital and Robinhood, however, fared very poorly in Congress.
Now for some good news! All of these antics have ignited the process of economic democratization of the economy — a process that started with Bitcoin and Co.
Now you don’t need to have a large amount of money to invest.
Now the markets belong to everyone. Individuals or institutions — there is no distinction.
So there isn’t anything stopping you anymore.
Maybe, just maybe, the future will consist of tons of diamond hands and hodlers.
The truth is that the economy has never been as democratic as it is today. Will you now take part in it?