7 min reading
What is the role of the WallStreetBets (or WSB) in the evolution of crypto? Let's get to the bottom of this question.
Who are the Wallstreetbets?
What is it? WallStreetBets (or WSB) is a stock exchange community, mainly composed of hobbyist investors, on the Reddit brokerage platform. Participants discuss trading stocks and options, talk about investing, share trading tips. Considering he’s on Reddit, it’s accompanied by the traditional Reddit-house style that often includes profanity, irony, and a huge dose of memes.
WallStreetBets is known for its aggressive strategies which involve short-term stock trading. The participants of this platform are young traders and investors who trade and speculate, ignore the basic investment principles and risk management methods, and therefore their activity is equated with gambling.
The emergence of the WSB cryptocurrency
WallStreetBets originated a few years ago, but it hasn’t been a long time since the cryptocurrency has become popular in its own right in the short-term squeeze of GameStop in 2021 due to the publication of a WSB member. It was a criticism of the hedge fund Melvin Capital, which went short on GameStop. A user of the Reddit platform found the company’s promises. Since that time, traders began to buy securities of unveiled companies, and the popularity of the WallStreetBets forum began to grow. Now the number of participants is over 8 million. The creator of this platform is Jaime Rogozinski, and the reason for this was the idea of creating a community where people could exchange their aggressive investment ideas. But now he does not take the fate of the trade, as he was hailed from the community for violating the rules of Reddit.
Reddit members are opposed to hedge funds that make money off falling stocks. Redditors at WallStreetBets began buying up assets from businesses that weren’t making a profit. And as a result, the value of the securities of these companies increased. And the first such company was GameStop. The share price of this company has grown several times, and from this hedge funds are suffering great losses. And there are several such companies. And all these actions lead to a massive stock market crash. The community can have a significant impact on individual stocks, it cannot change the entire landscape of the global market.
Impact of WSB
Since the beginning of the year, there has been a significant impact of the WallStreetBets community on the crypto industry, and the new WSB coin is up more than 130%. But it is worth understanding that the impact of WallStreetBets on stocks and asset values is fleeting. In most cases, sometime after subreddit investors and the community lose attention to the flash mob, stock and asset values will begin to gradually return to their original value. However, even such a short-term spike in value and attention can give a company a second chance.
And what will happen next with WallStreetBets is impossible to predict as the cryptocurrency market is very dynamic, volatile, and unpredictable.