Who are WallStreetBets, Elon Musk, and what is the cryptocurrency meme?
Low-income retail investors, hedge funds, institutions, corporations, commissions, and panicked brokers; you might expect to find these terms in the script for a new Hollywood movie such as The Big Short or The Wolf of Wall Street. In a sense, one could say that due to the sheer scale of what happened in January 2021 it might be time to grab a camera and run to set, adding in a couple of emotional scenes, a love story subplot, and a happy ending. As likely as this might be to happen one day, it needs to be understood that the events that occurred surrounding GameStop are not all that simple.
GameStop is a well-known shopping chain for video games, consoles, and accessories which has been steadily declining over the last few years. The stock was worth $62.11 in 2007 but hit a record low of $3.50 in March 2020. It didn’t look at all likely that this rate would change for the better, but in January this year (2021), the stock has since risen to $90, with a peak of $160, and is up a total of 400%. Behind this insane rise in value were the investors of subreddit WallStreetBets who clearly wanted to show that they had the power to make the stock market do extraordinary things.
The WallStreetBets subreddit was founded in 2012 by Jaime Rogozinski for young investors wanting to discuss finance, money, and trading.
When I created the forum, I was looking for a community, a place where people could talk about high-risk investing without apologizing for their mistakes, so that people could make money in the short term with their disposable income, Rogozinski explained in an interview with TMZ Live this Wednesday.
Founder of r/wallstreetbets Jaime Rogozinski stopped by @TMZLive to talk about his groundbreaking online community that is taking Wall Street by storm!! Check your local listings for showtimes pic.twitter.com/9K19gIl7Vv— TMZ (@TMZ) January 28, 2021
The hype created in the stock market by the WallStreetBets Reddit subforum is a first, and is unique in its scale. The WallStreetBets community is made up of anonymous investors who recommend stocks on the stock market, speculating on Wall Street stocks and finding weaknesses in the market or in financial products. Never before in the history of Wall Street have hedge funds lost so much money to a group of young retail investors. This event reignited the debate about stock market regulators’ actions and led to brokers such as Robinhood and Interactive Brokers deciding to cancel certain transactions, in particular securities such as GameStop, BlackBerry, and AMC due to general volatility.
Tesla, Dogecoin, Elon Musk
Thousands of new users have joined the WallStreetBets subreddit forum after its users caused this colossal spike in the prices of various stocks including GameStop. Last week, at the time of writing, GameStop shares were worth $40, but thanks to r/wallstreetbets members’ efforts they soared to $492. The buying power usually reserved for hedge funds was now in the hands of the people.
In the last few days, the forum has seen another massive asset buy; this time Dogecoin, a cryptocurrency that began in 2013 as a mockery of the crypto-asset fever caused by bitcoins, with the name taken from the Doge meme format. There are now 869,000 people on social media talking about this crypto-asset. Dogecoin idol Elon Musk has recently tweeted about WallStreetBets, and Robinhood and other trading apps have stopped trading GameStop shares. Those who have always held the money and power have now had to admit that this comparatively small group of Reddit users has changed the way they invest.
On February 4, Dogecoin value rose 50 percent after Elon Musk tweeted that “dogecoin is the cryptocurrency of the people.”
Dogecoin is the people’s crypto— Elon Musk (@elonmusk) February 4, 2021
Gene Simmons, leader of the band Kiss, has also declared himself a follower of the meme-based cryptocurrency, as well as rapper Snoop Dogg. As of February 8, 2020, Dogecoin was trading at $0.007 per coin and was the world’s tenth-largest cryptocurrency by market capitalization. Presumably, the unofficial goal is to bring the cryptocurrency to a dollar value, which would mean an additional 1230% increase over its current position.
After his initial tweet, Musk posted an edited meme from The Lion King, showing various celebrities supporting Dogecoin.
So … it’s finally come to this … pic.twitter.com/Gf0Rg2QOaF— Elon Musk (@elonmusk) February 7, 2021
Following Musk’s intervention, the cryptocurrency rose more than 65 percent, jumping to $0.054496, according to Coindesk. Musk has been active in the recent trading frenzy, tweeting about specific companies and cryptocurrencies, contributing to a surge in their prices.
However, earlier this week Musk said on the social audio app Clubhouse that he has no opinion on other cryptocurrencies, and that his comments about Dogecoin are merely jokes, adding that “the result will be more ironic for Dogecoin to become the currency of Earth in the future.”
It follows that the Tesla CEO is also in the game, knowingly causing their value to rise quickly and selling them when they fall again. The Reddit forums are now full of memes suggesting that the cryptocurrency trend has passed and that selling is the right thing to do, indicating that, for the traders of this social network, buying Dogecoin is no longer fashionable.
How did Dogecoin appear on the market?
Marketing consultant and expert Jackson Palmer along with programmer Billy Marcus created Dogecoin in 2013 as a digital currency aimed at making fun of bitcoins and the nascent ‘crypto fever.’ They used as their logo the famous Doge meme, never intending it to become anything serious. However, within just 15 days of its launch at $0.00026, its value had increased by a factor of 300.
The cryptocurrency even came to fund social work in countries like Kenya through the crowdfunding model. Its creators at the time defended betting on the fun side of the cryptocurrency phenomenon and justified the difference between their currency and bitcoin in terms of goals and development as simply: “Give value to absurd things.”