investor For the second time this year, the retail investor is frontrunning the institutional investor.
The first time was earlier this year when retail investors communicated on reddit wallstreetbets and short squeezed hedge funds on game stop and AMC stocks. This took hedge funds by surprise and caused them billions in losses. Retail investors didn’t appreciate hedge funds having large short positions on their favorite stocks, leading the retail investors to group together via Reddit and purchase up the price. This forced hedge funds out of their short positions and causing them to cover them by buying more stock. this further caused the price to increase, catapulting the price further up.
There is a strong argument
to be make that the short position is capitalism at its purest form. The fundamentals of these companies are weak and the market price will ultimately reflect that. At the same time, when 80% of a company’s outstanding stock are short, or even more than 100% in the case of game stop, this creates a public bearish narrative and can cause a stock sell off. Left unchallenged, this is self fulfilling position for the large institutional investors, which historically, has been very successful and profitable for them. This is precisely what the retail investors reddit wallstreetbets community was determined to stop, and they were very successful.
For the second time,
we are seeing retail investors front run institutions with access to digital assets. In this new cryptocurrency world, the opposite is transpiring. The playing field is leveled for all participants, with all players receiving equal access. There’s no exclusive seed investment round for venture capitalist, or series A, B and C for institutions with large checks. In fact, because of an individual’s ability to be nimble and make an investment with only $10, the retail investors are fist to the game. With no board approval processes and legal issues regarding custody, retail are first and will profit off institutions as they slowly pile in.
As it becomes increasingly clear with every passing day, Blockchain technology, and digital assets like Bitcoin and Ethereum, will play a significant role for the world for many years to come. This phenomenon has institutions anxiously finding ways to get involved by allocating capital in different areas of this developing technology. Digital asset custody for some has been a hindrance, due to the technical learning curve, and legal bounds posed by boards and investors of these institutions. NYDIG.com offers institutions an array of products to help bridge this gap.
As we have witnessed this passed half century, technology develops extremely fast and breaks all precedents. Each new technology development accelerates growth in a compounding speed towards the next breakthrough. We are experiencing this now with the internet and the collaborative online community, allowing blockchain to expand at lightning speed. We are living through fascinating times, where every month new technology is being introduced and developed. Stay tuned for interesting projects in the Blockchain space.