Since January 22, GameStop has received a lot of mainstream news attention, with the popular video game retailer (GME) shares surging 860% from $ 17.40 on January 4 to a high of $ 159.18 on January 25.

GME is down 51.70% from its peak to close at $ 76.79 on Jan 25, but what’s behind the massive recovery warrants closer scrutiny.

While strong fundamentals often drive the price of both stocks and cryptocurrencies down, recent interest in GameStop seems to have more to do with the “ Reddit army ” phenomenon, with internet groups clashing with some of the biggest companies. on Wall Street. …

The most famous manifestation of this trend in the cryptocurrency sector came when a group of dedicated investors Chainlink (LINK), referred to as “ LINK Marines ”, gathered to spread positive news about altcoins, and also promised to continue buying them when large investors developed a plan to cut LINK …

In early 2020, LINK Marines responded to Zeus Capital’s attempt to slash the alternative currency. When news broke that Zeus Capital had called Chainlink an “ encrypted postcard ” and went short, LINK Marines went into action, refused to sell, and pushed the altcoin price to a whole new high, triggering it back. short back presses.

The consequences of the short call also spilled over to Nexo Finance when LINK Marines members uncovered evidence that allegedly links Zeus Capital and Nexo.

Tyler Winklevoss, co-founder of Gemini exchange, previously acknowledged LINK Marines’ contribution to the cryptocurrency community with the following tweet:

“I really appreciate the enthusiasm of the $ LINK Marine. Their enthusiasm and dedication remind me of the early Bitcoin and Ethereum communities. Unlike many other armies of cryptocurrencies, they are dedicated to a project with real prospects and technical advantages. ”
A similar situation happened with GameStop on January 21, after Citron Research announced plans to go short as they believed the price of GME would drop to $ 20, and the response to the announcement was so quick that Citron Research was unable to complete the live broadcast. On Twitter. Broadcast due to the huge number of reviews.

Social investment groups have a very large impact on stocks
This is not the first time that a group of investors on a social platform has mustered their strength to raise the price of an asset, as a similar phenomenon happened with Tesla and Netflix shares in 2020.

Analysts have called for Tesla (TSLA) stocks to fall since early 2019, and a number of institutional investors have opened large sales deals only to have their value rise more than 1,000% since then, helping Elon Musk Short become the richest man in the world. the world. world. The short sellers, which had piled up on the advice of reliable Wall Street analysts, were overwhelmed by the continuous growth.

These upward moves are driven in part by the influence of Robinhood, a term coined to define irrational stock price movements triggered by retail buyers in mobile investment apps like Robinhood. The simple option of millennial traders made it possible to pump up TSLA and NFLX, leading to massive short positions squeezing again and again.

Netflix (NFLX) has also been plagued by talk of impending price drops for years, as analyzes have shown the company has drained money and lost subscribers from competitors but is still raising prices. Some of the best investment brokers considered stocks “sellable,” and there was a lot of discussion in the chat forums about why Netflix was short on stock.

When analysts wrote off the NFLX, the price jumped from $ 253 to a record high of $ 586 on January 20.

Unconventional methods compete with traditional investments
There has clearly been a shift from Tesla to GameStop in how investors interact with financial markets, and the drivers behind price discovery have also changed as retailers gain easy access to market information and analysis.

Threats to card merchants are nothing new, but the difference in this case is that it has become “internet hour, not business agents targeting short-term retail outlets,” as Christopher Smith mentioned in a recent TradingView post.

Smith said:

The stories of GameStop and Tesla show that retailers, when combined, can become market makers and do business with institutions. It also proves that markets are not necessarily efficient or rational. ”

Source: CoinTelegraph

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