The GameStop saga has underlined the fact that legacy financial markets are not fit for purpose.

As news on retail censorship breaks, one could even argue that the system is rigged against the ordinary retail investor. Could this be the final nail in the coffin that will destroy any semblance of confidence retail investors have in centralised legacy finance?

The war over America’s little known GameStop video-game store is a 21st century depiction of David and Goliath – an epic battle fought between small-time investors on Reddit against massive Wall Street hedge funds.

Briefly, the GameStop stock experienced a dramatic 1800% rise in January 2020 that saw two major Hedge funds having to liquidate their short position at a significant loss. Melvin Capital told CNBC that the hedge fund liquidated its position but denied rumours that it will fail. The size of the losses taken by Citron and Melvin remain unknown but it’s clear that it was enough for the White House, a US senator and social media companies to intervene. Hours ago, the White House said it is “monitoring” the extraordinary surge in the price of the video games retailer.

GameStop trading to be halted?

As hedge funds lose billions against savvy (ex)reddit investors, some US senators have even scrambled to put an end to free-market trading, similar to what the CCP (Chinese Communist Party) does when markets do not trend in the desired direction. In one of several attempts to protect hedge funds, Massachusetts Secretary of State Bill Galvin has called for a 30-day suspension of GameStop stock trading.

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Social Media Censors Retail Investors

As the situation spirals, some forum social posting firms have also shown their true colours. In a shocking and blatantly anti-free-market move, both Reddit and Discord shut down the community that made it all happen, citing ‘hate speech’ as the reason for the takedown. The slur ‘hate-speech’ being the catch-all excuse that it is, it’s hard not to conclude that these social media companies are acting at the behest of their hedge fund friends.

Prior to the takedowns, r/wallstreetbets wrote the following letter to mainstream media outlet CNBC, underlining that their actions could alienate an entire generation of savvy new investors.

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The moral of the story is simple: the entire legacy financial system is not fit for purpose. 

Lawmakers and darling exchanges like Nasdaq were quick to react when hedge funds lost against retail, but the same cannot be said when the situation is flipped.

Of course, r/wallstreetbets has a habit of suggesting things that exist on the tail end of risky decisions, but that’s another story all together. The point is that financial markets are stacked against the retail investors who found a chink in the armour and exploited it. Oddly enough, financial markets are all about ‘getting an edge’ over the competition, yet when retail does it then governments and corporations collude to put an end to it.

As with all things on this blog, all roads eventually lead to bitcoin and cryptocurrencies. Indeed, there has never been such a defining moment that unilaterally demonstrates the endemic reach of elite influence on financial infrastructure, communications and the entire monetary system.

With this backdrop the case for bitcoin has never been stronger.

Update 28/01/2021

Robin hood app limits GameStop, AMC and other publicly traded companies.

In an astounding admission of top-down market manipulation, Robinhood are now unable to enter GameStop and Entertainment Holdings positions.

Screenshots from Robinhood users confirm GameStop’s stock is “not supported on Robinhood.” The commission-free broker is warning customers the platform will only handle orders to “close out your position.” Customers are banned from purchasing additional shares.

Shares of GameStop continued their mind-boggling surge higher Thursday morning as it hit the $500 per share mark in the premarket trading session. AMC shares were trading in the opposite direction as it was down around 20%.

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