The GameStop (GME) stock is experiencing more volatility than the cryptocurrency market as the cryptocurrency queen Bitcoin seems to be caged in a sideways channel that fluctuates between $31,000 and $32,000.
January 29, 2021 | AtoZ Markets – For several days now, traders in the stock markets have been observing the situation with the shares of the GameStop network – users of the Reddit forum “dispersed” the price of shares so that institutional traders suffer losses.
Revenge of the day traders
A week ago, GameStop’s stock price did not exceed $50 per share, but yesterday, on January 28, it reached $480. There is only one reason for this – on the popular Internet forum Reddit, an entry appeared that institutional traders opened positions to decrease the shares of a chain of stores.
Forum users decided to “punish” the owners of hedge funds and started buying shares in the company. The initiative turned out to be even overly successful – the volatility of the shares in just a few days exceeded 1,600%.
Until a few years ago, this was impossible to imagine, but now large financial institutions have to reckon with the opinions of retail traders. Hedge fund Melvin Capital, which went short in GME, posted a 70% loss after managing $ 12.5 billion at the start of the year.
The situation has attracted the attention of financial regulators and politicians. Thus, the press secretary of the new US President Joe Biden Jennifer Psaki said that the Treasury Department is closely monitoring the situation. Popular platform Robinhood turned off the ability to trade GameStop shares, which caused a significant negative towards the company. The same measures were taken by a large American broker TD Ameritrade.
GameStop stocks more volatile than Bitcoin
The volatility of GME stocks significantly exceeds the volatility of the cryptocurrency market, and it is the volatility of Bitcoin that many “financial experts” call a sign of an underdeveloped market.
Earlier, the US Securities and Exchange Commission (SEC) repeatedly refused to launch an ETF on Bitcoin, talking about the volatility of the cryptocurrency market and the possibility of manipulation. So far, the manipulation of GameStop shares has not caused any action by the regulator.
Earlier, the CEO of Ark Investment Management Catherine Wood expressed the opinion that the SEC is unlikely to approve a Bitcoin ETF until the capitalization of the first cryptocurrency rises to $2 trillion.
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