Maybe you already know Wallstreetbets GameStop phenomenon. There is one interesting thing when visiting a crypto rating site, Coinmarketcap, above Bitcoin is ranked zero, Wallstreetbets (WSB). What’s the matter with Wallstreetbets, why is it ranked “0” above the crypto king Bitcoin?
But after clicking the link it turned out its write just a joke and there was no crypto asset.
WallStreetBets is a subreddit community whose influence seems to have spread to the crypto market from previously only focusing on the American stock market.
The reason this assumption was formed was the entry of a new coin to the first rank of CoinMarketCap on Friday, January 29, 2021, named WallStreetBets.
On the rank page, WallStreetBets is listed as ranked 0 on CoinMarketCap but is above the first rank, namely Bitcoin. This coin appears to be up about 134% in 24 Hours with a trading volume of $ 100 Million with a circulating supply of 51,442,000 WSB.
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What does Wallstreetbets mean?
Wallstreetbets (WSB) or also known as r/wallstreetbets is a Reddit community that is a forum for lower-middle-class investors to discuss developments in the American stock market.
The WallStreetBets community regularly talks about the stock market. Members of this community share information and recommendations on which shares to buy based on their respective analyzes.
The Wallsteetbets community grows transformed into a more solid community with mature plans. One thing that is currently excited is “saving” GameStop from short-selling by hedge funds.
Wallstreetbets community member
According to Wikipedia, Wallstreetbets members are young investors and investors who are ignoring fundamental analysis and tend to take speculative action. This community is very aggressive in trading with profits and losses that occur. So it’s close like a gambling way.
This community grew even more with the emergence of commission-free brokers, and their members buying trending “meme stocks” in the community. Even with loans and still as students. So this community really grew from the underground from retail investors with a total membership of more than three million.
What is Wallstreetbets Reddit?
The “r/Wallstreetbets” group (aka WSB) is a subreddit channel that was founded on January 31, 2012, by founder Jaime Rogozinski.
As of February 2021, Reddit Wallstreetbets members have reached 8.7 million. The drastic increase in the number of members was due to the increase in Gamestop shares which made bankrupt short sellers of Hedge funds.
The Reddit Wallsteetbets community is actively discussing highly speculative trading ideas and strategies. Wallstreetbets Reddit described it as “like 4chan found Bloomberg Terminal.”
Youth investor community
Most members come from young people or teenagers who better know this community, and they prefer to use terms that are not commonly used in usual terms. They prefer to use memes or jokes when expressing an event, such as saying “Stonks” to replace the term “Stocks”
Even though it was just a joke, earlier this year this community really caused an uproar regarding the news about the battle between the Wallstreetbets Reddit community vs hedge funds that managing large funds.
Its members, which reach 8.7 million people, if they buy or sell one trading asset, this can cause an increase or decrease in the value of the asset or loan.
After the Gamestops case, it possibly will move in another set like Crypto.
How Wallstreetbets works?
If professional investors are looking for reference data for their analysis before buying or selling stocks, they will subscribe to news portals that provide real-time data sources, so they get information faster than retail investors.
These professional investors use fundamental data in order to buy shares in companies with good performance. And sell shares in companies with a decline in performance.
For retail investors, getting sophisticated information that requires a subscription with a capital of thousands of dollars may be reluctant. So they prefer to search for news references through Google or other search sites to get information related to the topic they are looking for.
Wallsteetbets can be an alternative that works as a source of information for retail traders. Because of that Wallstreetbets is described as a Bloomberg Terminal.
Wallstreetbets works by applying binding rules for its members to provide stock analysis. These analyses using the data and information contained in the article and possibly bullish or bearish.
It is from this discussion in the community that retail investors buy shares that are hotly discussed. And most of the young investors choose short-term trading.
Wallstreetbets posting rules
Wallstreetbets has rules regarding member posting, not politics, paper trading or market manipulation, bullshit. The new rules are known to be updated at an early date in February 2021 ago which may be due to the increase in Gamestocks stock which is suspected of being a result of this community.
Who started Wallstreetbets?
Who was behind who first started the Wallstreetbets community which is currently becoming a controversy? He was a man by the name of Jaime Rogozinski, a 39-year-old man at the time of the press who lived in Mexico City.
The purpose that was built was just for a joke discussion in the middle of stock trading, when someone loses, I lose money, or when someone gains, it can be expressed in this community.
In the Wallstreetbets community, most of them only use nicknames so that the names of the members are not known exactly.
Brief biography Jaime Rogozinski
Rogozinski was born and raised in Mexico, then studied in America, economics, and electrical engineering at the Urbana-Champaign campus at the University of Illinois.
He successfully graduated in 2005, then founded a company for IT support before working at the Inter-American Development Bank, the main source of funding for Latin America, in Washington, DC.
In 2012, he was so interested in stocks that he was looking for a place to share his aggressive trading ideas. It was from that idea that he decided to start his own on Reddit and launch WallStreetBets that year.
Jaime Rogozinski left the WSB
Along with various stories in the community, According to Thereverge, he clashed with Reddit, and then he was no longer the moderator.
He could not have imagined that it would have an impact on his life and he stated that it was like seeing a horror film where a bad guy walked slowly towards the stairs.
The story began when launching a book entitled WallStreetBets: How Boomers Made the World’s Largest Casino for Millennials.
He also organized a live trading tournament with 12 contestants watched by thousands of spectators.
However, it turns out that what Jaime is doing is breaking Reddit’s rule that Reddit members are not allowed to make money from the community so he is not allowed to further moderate Wallstreetbets and a 7-day ban in all Reddit communities.
How Wallstreetbets pushed GameStop?
GameStop (GME) shares which are traded on the New York Stock Exchange (NYSE) are in the spotlight of many parties.
Fundamentally, this giant gaming company does not have a very strong foundation amid the coronavirus pandemic. However, the value of GME’s shares has skyrocketed by more than 1,000 percent since the beginning of 2021.
It turned out that the strengthening was boosted by the steps of investors who are members of the Reddit sub-forum called WallStreetBets, to buy shares of companies that are experiencing difficulties, such as BlackBerry (BB), Macy’s (M), AMC (AMC), and the most. GameStop.
Melvin Capital loss vs Wallstreetbets
Initially, hedge funds act short-selling Gamestop shares and succeeded in causing the stock price to fall to around $ 2.5 per share.
Short selling is the act of selling a stock without owning the stock itself. This is done by borrowing shares from security. Then selling them, with the hope that the share price will decline so that short sellers can buy it at a low price and return it to the security.
Then, investors who are members of Wallstreetbets invite all members to buy GME shares. Their action is to encourage the shares of the Gamestop company which is sick amid the pandemic.
As a result, GME shares began to rise on January 11, 2021, along with the appointment of three new directors. There is a member as a student they borrow student loan and state already recover the loan and get profit from the bets.
After that, from day to day there is always a strengthening of GME shares and causing hedge funds to suffer losses. One of them is Merlyn Capital that suffered a loss of 53% from short-selling GME.
Based on reports that the hedge funds that carried out the short-selling action suffered losses of more than 5 billion USD.
Gamestop shares events like a battle between an army of ants and an elephant. And the elephant can be conquered by thousands of ants.
Is Wallstreetbets market manipulation?
Since the pandemic, the members of the Wallstreetbets community have experienced a tremendous increase. At a time when the press number has reached 8.7 million.
With such a large number, there is the potential that the WSB community can manipulate the financial market. Members who are retail investors will bet with unified arguments in discussion forums and can boost share prices.
Since the community was first created, the members who joined were not too big. Then in 2016, there was an increase in the number of members graph. From 2019 to January 2021 there was an increase of 72%. However, currently, there are more than 8 million members, and may still continue to increase.
Pump and dump scheme
Analysts conclude that the event of the increase in GME shares is a “pump and dump.” Community action is aggressive trading by buying the same shares. And releasing them for profit.
Although there was no evidence of transaction violations. It was only an attempt by a troll to buy stock. Which in time would return to normal when it reached its saturation point.
Wallstreetbets but for crypto
In the Wallstreetbets discussion forum, one of the crypto assets that is a hot topic of discussion is XRP. Based on reports that the XRP target can increase by 100%.
Looking back, there has been a high increase on February 2, 2021, reaching a high of 0.75742.
This is possible as a sign that the WSB community can manipulate the market. With every action taken massively by the members.
The WSB has successfully pumped XRP into the third cryptocurrency to reach a market capitalization of over $ 26 billion.
Robinhood down Wallstreetbets
The impact was enormous and full of frenzy has slapped the Wallstreet wholesalers hard. They accuse the attempts of market manipulation through systematic and coordinated actions.
However, the retail investors in the Wallstreetbets community are not Wall Street traders. Most of them are users of the Robinhood platform because of the low transaction fees.
Then, due to the increase in GME shares. One reports emerged that Robinhood temporarily restricted awhile trading platform awhile. until conditions returned to normal.
Usually, retail investors always lose to financial giants. But what is happening now is that the dealer has collapsed and is being defeated by retail investors.
This event is very rare because so far the financial giants with large funds. They are able to make prices rise or fall to carry out short selling.
Like an army of ants attacking a big elephant, making the elephant fall and surrender.
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