Opinion | How bitcoin offers GameStop investors freedom from Wall Street tyranny

The GameStop frenzy was not about balance sheets and cash flow but rather identity, community, financial agency and demanding a fair and free marketplace

Bitcoin and the space it represents appeal to a new generation for whom the web signifies agency without borders, and institutional investors are going long

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Hugo Zheng, manager of ixFintech, shows how to use a pre-provided paper wallet and QR code to buy bitcoin at a shop in Kennedy Town on February 8. Photo: Felix Wong

Published: 1:30am, 13 Feb 2021Updated: 2:40am, 13 Feb 2021

Retail traders were seen as emotional, unsophisticated and, when up against institutional investors, at a structural disadvantage. That is, until they banded together in the thousands and decided to take a stand against Wall Street.

The hype in relation to the GameStop saga has died down somewhat. It is still worth reflecting on, though, because it signals an important transformation in market psychology and might have great implications for the months and years to come – in particular, for bitcoin and decentralised finance.

In January, members of Reddit group WallStreetBets, known for their aggressive trading strategies, were able to push up the price of GameStop by more than 8,000 per cent from May 2020.

In a concerted effort that involved thousands of retail traders, the collective was able squeeze hedge funds out of their short positions, with Melvin Capital reportedly losing more than US$3 billion. If not for trading apps such as RobinHood disabling the buy function while institutions were still able to trade, the rally could have continued for longer.

What mainstream media and financial commentators failed to see was that WallStreetBets was operating on a different set of fundamentals. This was not about balance sheets and cash flow but rather community and financial agency. It was about demanding a fair and free marketplace.

It was also about identity, as expressed in an open letter by one of the WallStreetBets members to Wall Street and CNBC: “I own GameStop not because Diamond Hands. I own GameStop because I AM GameStop. I am choosing to invest in my generation, and selling would be selling myself out.”