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The hottest topic in trading at the moment is the ongoing battle between Main Street and Wall Street, after a number of trading forums, such as WallStreetBets, Reddit, and Facebook got together to move the price of heavily shorted stocks such as GameStop and AMC last week.
Financial markets participants attention is squarely focused on this battle again this week, with many analysts having very real concerns about the eventual outcome, and implications of this newfound phenomena.
Tensions between both sides have reached extreme levels after certain brokers were pressured into not allowing retail traders access to the stocks being heavily speculated on by forum groups. Wall Street has also called for regulatory actions, and big tech has temporarily closed down certain trading groups, which has further infuriated the retail trading community.
In theory retail traders are agreeing on a set data and time to buy a stock or asset class in advance, and then they create a flurry of one one-way trading activity, pushing the stock or asset class higher. Hedge funds that are short sellers then have to buy back the stock to cover the loss, and this then generates massive upward momentum.
The amount of new weekly trading forum members has also surged drastically since last week, which is also worrying Wall Street. The more traders that join in the market pumps, obviously the more power these strategically targeted attacks have.
Redditors wasted little time over the weekend, and set their sights on the cryptocurrency market, namely Ripple. Over the weekend, Ripple surged by over 50 percent in value, as the pre-agreed retail pump sent the cryptocurrency surging higher.
Just a few days prior, the forum groups started to set their sights on Dogecoin. This particular digital asset is known to have particularly bad fundamentals; however, the forum groups once again proved their ability to move markets. Silver was also in the sights of the forum boards on Thursday.
Silver is an entirely different animal. Rising silver prices have huge implications globally, especially in the real economy. The price of silver is said to be dramatically manipulated by market forces. JP Morgan in particular are exposed if the price of silver moves dramatically higher.
Something else to consider is pension funds. If pension funds and 401k’s are somehow brought into the ongoing battle then this could have serious implications for the real economy. Many of these funds are index links, and if for instance the S&P 500 and Apple are targeted, and start to take heavy losses, then the situation could quickly get out-of-control.
It is worth noting that this coming attack on Wall Street has been years in the making. Many of the forums have seen massive growth since the advent of COVID-19, as the general public works from home and is drawn to online trading like never before.
During the upcoming trading week ahead, some of the forums are already starting to set their sets on asset classes such as Bitcoin, Ripple, and silver. Again, the silver market is the one to watch as it has huge implications for the real global economy.
