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The coin circle can be successfully staged to force empty drama

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After GME became famous, Reddit retail investors turned to the digital currency market.

Can Bitcoin Repeat the Story of Retail Scavage on Wall Street?

Original source: Panews

Retail group staged a forced air war, the first institutional eyes of the "junk stocks" rose 20 times, after the dog currency with MPE attributes was pulled up 1000% within 24 hours. Central banks around the world continue to release water, the flood of liquidity, against the background of anti-elitism, retail investors rely on collective power to squeeze short institutions, after the GME war became famous, Reddit retail investors turned to the target of numberscurrencyThe market.

Wall Street's fierce battle fiasco, citron research revamp;

Recently, the worldfinancialWallStreet bets, a subsection of Reddit, has seen retail investors form an army to bet against WallStreet's big shorts in a "century of war". At present the battle falls gradually curtain, big short people "explode warehouse", by individual investorsinvestmentComplete defeat.

Data firm S3 Partners on FridayThe released statistics show year-to-date inThe gameAt one point, short losses on GME (GME), which started the year with a market cap of just over $1 billion, reached $19.75 billion.

Let's recap briefly what happened.

The GME has risen more than 20-fold from around $20 in January to a recent high of $483, thanks to retail investors. At the beginning of last year, the stock was trading at $3, and the gaming entity had been in decline for years, making it the target of short sellers. Not only did Melvin Capital, a hedge fund with more than $12 billion under management, join in, but Citron Research, a star hedge fund, publicly declared that GME was worth only $20.

But things turned around earlier this year when entrepreneur Ryan Cohen announced he was joining GME's board of directors after acquiring a large chunk of GameStation's stock. When Citron's short video came out and his argument became unconvincing, GME's shares surged back, closing at $39 on January 20.

In addition, a user with ID DeepFuckingValue (DFV) on WallStreetBets has been diligently analyzing GameStop's stock and discovered that GME is heavily short-shorted, with the number of shares short at 150% of the number of shares outstanding.As long as GameStop does not go bankrupt in the future, there is likely to be a short squeeze by short sellersSo he invested $50,000 in GME stock and Long TermoptionsOn.

On Jan. 28, CNBC reported that Melvin Capital had finally abandoned its short position on GME, opting instead to liquidate it. It is estimated to have lost at least $3 billion and later received a $2.7 billion bailout from Citadel. And citron research also announced to give up to do short likewise, 45 knife admission, 90 knife exit, loss reached 100%. The drama of retail investors beating institutions became famous in U.S. stocks.

Late yesterday, Citron's founder Andrew Left announced in a short video that he was suspending his 20-year career as a short seller. Citron also posted on its social media platform thatWill stop short research and focus on long-only opportunities, providing retail investors with multiple investment opportunities over the long term.

Short squeeze. The option was the last straw for the short

Why can retail investors win? Simply attributing the GME incident to the blind push up of the share price by the solidarity of retail investors may not be the whole story. The essence of what actually drove GME's share price higher was a short squeeze,Without the risk of a short squeeze of its own, retail investors will still be unable to compete with institutions. In addition, there are institutions in the long admission, in fact, long institutions and retail joint efforts to eat short.

Shorting stocks amounted to 150% of the float. Short sellers had already planted a bomb when they overshorted GME, and WSB retail investors had just found the bomb and lit the fuse.

By shorting GME, Wall Street firms need to borrow shares to sell, then buy them back when the price falls. However, it is because of excessive short, bring about the stock on the market in the circulation of contraction, plus individual investors are determined to come, the stock in the hands is determined not to go out, is to kill short.

The sudden decrease in liquidity will lead to a rise in stock prices, which will lead to more serious losses for short sellers, so they will need to buy more stocks to return, which will further cause a rise in stock prices, and fall into a "positive cycle" of stock prices.

What's different this time is that when retail investors are forced to go short,In addition to buying a lot of stocks to push up prices and buying a lot of call options, the volume of options traded in recent days has far exceeded last year's total.Increasing share prices force market makers, who have a lot of negative Gamma, to buy stocks to hedge, creating a further positive feedback.

However, a relatively important reason for the emergence of this "century to force the war of space" is that the Federal Reserve and the central banks of various countries released water successively, not only in large quantity, but also at a fast speed, resulting in the flood of liquidity in the market, that is to say, ordinary retail investors have money in their hands.

In addition, in the new epidemic of 2020, the US government grants subsidies, so residents need to stay at home or work at home, and the decrease of personnel mobility increases the probability of retail investors to invest in the stock market. This is reflected in the stock market, resulting in a surge in trading volume in the United States, increased risk appetite of investors, general bubble overflow in the market, abnormal increase in trading volume and volatility of individual stocks, and long-term deviation of some prices from the fundamentals.

And the rational value shorts think this is a good time to get in and go short. But Keynes said: "The market can remain irrational longer than you can stay bankrupt." According to some statistics, Citron lost $1 billion if GME rose $20 a day.

On the other hand, the market also emerged a new way to play stocks --Social networking is Fried. Since Tesla, investors have gradually formed a social group. They not only buy Tesla shares, but also Tesla car buyers. They communicate in the community at high frequency and keep news timely, which leads to the acceleration of sales growth and stock price of Tesla, and continuously form positive feedback, further promoting the profit and stock price of Tesla. This group is a good template for "social stock trading,"There is a very strongMpe properties.

Can the coin circle force empty successfully staged?

On January 29, Coingecko data showed that Dogecoin as high as $0.085, the market value reached $10 billion, more thanLTC, ranked seventh on the market capitalization list.

On Twitter andTelegramOn, Dogecoin has received a lot of attention and discussion. However, the WSB Chairman mentioned above is a "single boss" on Twitter. He is mistaken as the moderator of the WallStreets Bets forum, and it is with the current influence of the WSB that he has formed a strong cohesion among retail investors. This was followed by Dogecoin's maximum rise of 1000% in 24 hours.

Yesterday afternoon,Tesla CEO Elon Musk changed his Twitter profile to "BitcoinLater that evening, Reddit co-founder Alexis Ohanian changed his Twitter profile to "Bitcoin."

According to Deribit Insight, in the 30 minutes after Musk changed his profile to Bitcoin, the price of bitcoin dropped from$30,000 quickly rose to $38,000, liquidating a $400 million short position.

"Data Show Bitcoin Could Be the New GameStop," Bloomberg reported today, because yesterday, the crypto community called on Twitter that investors would take collective action to destroy nearly $2 billion of short positions held by hedge funds around 8 a.m., Beijing time, on Jan. 30.

Whether the coin circle can appear similar to the GME type of forced empty event? Lin Chen, DeRibit's head of business for Asia, tells Panews,"The coin circle also experienced a course of GME basically, a lot of deep dummy options, once the price soared; Cause market makers big losses, 'dog bet' big profit.

For example, a large investor once bought 3,000 call options with strike prices of $32,000 and 17,000 strike prices of $36,000 that expired on January 29, 2021, when Bitcoin was about $20,000 in November 2020, and then exited the positions around January 11, making a fortune of about $80 million.

The latest CFTC Financial Futures Traders report also noted that net short positions in bitcoin futures are now at an all-time high. Hedge funds have been shorting bitcoin, in part to cover their long positions.

Overseas retail investors, pressured by restrictions on stock trading, have turned to speculating in bitcoin and other assets. But Lin adds, "ButThe coin ring is cash delivery, not physical delivery; So it doesn't generate as much of a positive cycle directly as stocks do."

It is worth mentioning that on the afternoon of January 29, there were 103,000BTCOptions expire, and a large investor spent $13 million on a call option priced between $50, 000 and $52, 000. That money is now in the pockets of market makers.

As pioneer John Borg said of the Magellan Fund,"Those who live by the sword will fall by the sword. He who lives by the sword shall die by the sword."

We do not want to see the blind admission of retail investors on the road of "lapping blood with knives", otherwise, sooner or later become the body of the bag.