The epic short squeeze is yet another illustration of the yawning chasm between Main Street on one hand, and Wall Street and Washington on the other. From Mark E. Jeftovic at bombthrower.com:
A couple weeks ago one of my brother-in-laws asked me about investing in Bitcoin (he knows I’m gearing up a newsletter specifically about crypto equities) and it made me wonder if we were near the top of this cycle. Sure enough, BTC has come off a good 25% off the peak, Ethereum is still holding up near all-time-highs. But it was that everyman-talking-Bitcoin dynamic that is almost a trope now. Starting with the possibly apocryphal story of Joseph Kennedy top-ticking the stock market in 1929 upon receiving hot tips from the shoe-shine boy ,the idea that when “normal people are getting rich, something has to be off” was almost conventional wisdom.
Now it’s not conventional wisdom, it’s Establishment Canon.
I trust you already know the story of /r/WallStreetBets because even more everyday people are talking to me about Gamestop over the last 72 hours than Bitcoin (cryptos skyrocketing a mere 50% or 100% is quaint now. The slow lane).
Gamestop (et al) is where the action is now. At least until this morning.
The epic short squeezes had some hedge funds being carried out because their naked shorts have blown up. Reddit clamped down on WallStreetBets, briefly making the subreddit private and then re-opening it. I actually expect Reddit to suspend them, any second now. WallStreetBet’s Discord was shut down (for “hate speech” – get used to hearing that one from now on) and as of this morning, Robinhood has suspended new long positions in Gamestop, AMC and a few other garbage stocks that hedge funds were shorting the hell out of.
As many are quick to comment…