Earlier this week, Elon Musk made historical past when he positioned his full help behind Bitcoin (BTC) throughout a Clubhouse stream. When discuss
Earlier this week, Elon Musk made historical past when he positioned his full help behind Bitcoin (BTC) throughout a Clubhouse stream. When discussing Bitcoin and the GameStop debacle with Robinhood CEO Vlad Tenev, Musk stated: “I’m late to the social gathering, however I’m a supporter of Bitcoin.” This got here just a few days after Musk modified his Twitter profile, including “Bitcoin” to his bio.
Curiously sufficient, Musk’s public endorsement of Bitcoin comes at a time when legacy monetary markets have been overtly caught defrauding their very own clients, and the Robinhood app is on the heart of this fraud. Certainly, the richest man alive instructed the world that he believes Bitcoin is on the verge of mass adoption amid a backdrop of felony inventory market conduct.
The GameStop saga
For these unfamiliar with these occasions, the GameStop saga is a “David and Goliath” story that started off with a group of on-line merchants on the subreddit r/Wallstreetbets bringing down hedge funds — clawing away at billions of {dollars} in institutional quick orders. A brief order is a kind of order that enables buyers to revenue from the demise of an organization.
After retail buyers realized that hedge funds shorted GameStop for 150% of its whole public inventory — i.e., extra shares than existed — a gaggle of two million (now eight million) Redditors found out that by shopping for the inventory and never promoting, hedge funds that shorted GameStop would lose billions. And thus it was. By Jan 29, the loss tallied $19.75 billion as phrase unfold by way of the ability of the web.
Nonetheless, as quickly as retail buyers started successful, the long-reaching tentacles of centralized companies have been capable of cease the sport completely, freezing buying and selling on key exchanges and buying and selling infrastructure in order that hedge funds may reposition with out dropping every thing.
Decentralization and the “American dream”
Certainly, one of many largest fictions of our time is the story of free markets. This idea embodies the “American dream,” whereby anybody who chooses to comply with their desires can achieve this (at appreciable private threat). This contains the power to be rewarded (or punished) for having a stake within the monetary sport, which ought to function underneath strict guidelines.
Whether or not it is high-frequency buying and selling, artificial derivatives, infinite money-printing or some mixture of all three, the inventory market rewards a handful of insiders who sport the system and play by a unique algorithm than everybody else.
It is necessary to appreciate that the difficulty will not be the sport itself — free markets are probably the most environment friendly approach of correct worth switch, if achieved appropriately. The difficulty is that guidelines solely apply if institutional gamers win, in any other case they are often damaged, suspended and revised with minimal penalties for these with buddies in excessive locations.
This drove many Redditors to the purpose the place, figuring out that the market is rigged, they didn’t care about dropping cash, offered hedge funds lose billions. It began out as retribution towards these answerable for the 2008 monetary disaster and the distress that many needed to endure due to it.
This Reddit publish paints a great image of the motivations that impressed tens of millions of individuals to band collectively towards crooked monetary conglomerates. After all, different motivations — comparable to revenue motives — have been undoubtedly at play because the market fed by itself self-reinforcing mechanisms. Regardless, the system’s true colours are actually on the market for all to see.
And whereas legacy monetary media has tried to steer the narrative in a sure course, the reality of the matter is that this story is apolitical and exposes the truth that peculiar on a regular basis persons are not allowed to win. No matter intentions, the inventory market is proven to be a method to entrench and exacerbate poverty in a rigged sport that solely advantages those that are already rich.
The beginning of a journey
Nonetheless, the journey does not finish right here — for there’s a parallel system that isn’t managed by Wall Road or central bankers, and it is rising as we converse. With a market capitalization of over $1 trillion, cryptocurrencies are quick changing into the brand new frontier for monetary markets that haven’t any allegiances.
On high of being a brand new know-how that democratizes markets, there may be now a crystal-clear purpose for buyers to decide out of the previous system and enter the brand new one.
Bitcoin began this revolution 11 years in the past, and it doesn’t cease there. A completely new monetary ecosystem is being constructed on Ethereum from the bottom up, which has sprung a wealth of decentralized finance merchandise with numerous trade-offs and use circumstances.
This time final yr, capital in DeFi merchandise reached the $1 billion landmark. At present, that determine is approaching $30 billion, in response to DeFi Pulse.
With this backdrop, the way forward for monetary markets appears nearer than ever earlier than.
This text doesn’t include funding recommendation or suggestions. Each funding and buying and selling transfer includes threat, and readers ought to conduct their very own analysis when making a call.
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