Can Dogcoin Replicate the Story of GameStop’s Wall Street Shorting?

Why Dogcoin has skyrocketed? Have bitcoin and ethereum turned into a game for big capital? Can Dogcoin repeat the story of GameStop?

Can Dogcoin Replicate the Story of GameStop's Wall Street Shorting?

A war without smoke and mirrors on Wall Street in the US in early 2021 was impressive, with a large number of retail investors and well-known short sellers such as Citron Fund fighting around targets such as GameStop. The Citron Fund eventually lost billions of dollars and announced that it would never short the company, and GameStop’s stock price soared. The retail investors who got a taste of it are now putting their eyes on dogcoin again.

Why is dogcoin skyrocketing? Has Bitcoin and Ether become a game for big capital? Can Dogcoin repeat the story of GameStop?

On May 8, Barry Hilbert, owner of Grayscale Capital, the world’s largest institutional holder of bitcoin, announced on social media that he had shorted dogcoin and wanted everyone to return their attention to bitcoin.

According to public data, Grayscale Capital holds 653,300,000 bitcoins worth $38.014 billion. And Barry Hilbert, the founder and CEO of Grayscale’s parent company Digital Currency Group, is a Wall Street tycoon.

On May 9, Tesla CEO Elon Musk said during an appearance on the U.S. variety show Saturday Night Live that dogcoin is the future of money, an unstoppable financial instrument that will take over the world. The emergence of dogcoin is a “hustle” (it is hustle here, but it is not directly understood as a “scam” here. “hustle” also means chivalry in Western culture, refer to the British drama “Hustle”).

Why did Barry Hilbert announce his intention to short retail investors’ favorites like the Citron Fund did? The background is that at the beginning of 2021, the price of dogcoin soared more than 140 times in less than six months under the powerful call of Musk, the spiritual leader who gladly appointed himself “CEO of dogcoin”. The investors are mostly retail investors in the United States, not big money institutions, so Musk calls it “the people’s currency”.

It is a very different investment concept, with the most direct dream of getting rich and a grounded spiritual slogan, and its investment return is directly away from the traditional institutions that are heavily invested in bitcoin and ethereum.

Such a hilarious air cryptocurrency has no real value or innovation, yet its market cap has peaked at over $100 billion. In contrast, the recent prolonged period of negative premiums on Grayscale Capital’s bitcoin trust products is a reaction to investors’ diminishing willingness to buy. This naturally makes the skyrocketing of dogcoin unacceptable to Wall Street elites like Barry Hilbert.

Why is dogcoin skyrocketing like crazy? In addition to Musk’s stand, we can focus on these two perspectives.

First, multiple trends suggest that bitcoin and ethereum, two cryptocurrencies, have turned out to be further and further away from the average investor. As of May 10, bitcoin prices are holding near $60,000 and ethereum is about to break the $4,000 mark. In terms of price, many Americans can no longer afford to buy a bitcoin for their income.

In terms of on-chain data, as of January 2021, exchanges hold 2.36 million bitcoins, or 12.7%, and funds, custodians, OTC counters and other institutional entities hold 31.7% of bitcoins, according to research by data research site Glassnode. Given that the total number of bitcoins is only 21 million, and the addresses of recent large purchases of bitcoins are traditionally large funds, it is foreseeable that the concentration of large bitcoin addresses will further increase.

In other words, this round of ethereum and bitcoin price increases have been driven by the entry of incremental capital from traditional institutions. Most of the coins flowing in the market are slowly being pocketed by large institutions, and in turn the high prices have been out of reach for retail investors. The wealth gap represented by Wall Street in the US will be repeated in the cryptocurrency space.

So, dogcoin is again a reproduction of the American people’s anti-Wall Street elite culture. The structural problems exposed by the U.S. economy since the 2008 subprime crisis have not been addressed, and even during the epidemic, the wealth of the Wall Street elite grew massively as usual, while the American people still needed government-issued checks to stay afloat.

The initial intention of the retail investors who pulled up the share price of GameStop at the beginning of the year was very simple: to guard their childhood memories and make Wall Street lose money. From the end result, the surrender of Citron Fund did achieve the immediate purpose of the retail investors, but the deep-seated demands behind it were not actually distilled or heeded by the elites represented by Wall Street.

Even the SEC, which acts as an arbiter, announced that it would also investigate whether market manipulation is suspected in the U.S. posting “WallStreetBets” board, while the “Bill Hwang” incident, which just blew up, shows that institutional investors will also be involved. The “Bill Hwang” incident shows that institutional investors can also abuse the tools, but the institutional investors and retail investors are treated very differently.

The American people’s dream of wealth and anti-Wall Street narrative needed a new investment target, and the geek culture of cryptocurrency itself and the ironic spirit of dogcoin fit that perfectly. That’s why Musk calls it “theft with a twist”. For the elite, it’s a scam, but for the American people, it’s an orgy for the common man.

Dogcoin and GameStop are not fundamentally different as investment targets, but note that its surge is not about retail investors simply sniping Wall Street, but a huge bubble created by the public’s dream of wealth during the bull market boom combined with the anti-authority spirit in American culture. This makes the two forces collide again in the field of cryptocurrency. Who will lose and who will win this time, and which side are you on?

Since Barry Hilbert announced his short sale, on May 9, according to CoinMarketCap data, the 24-hour dogcoin dropped by up to 40% and is now narrowing to around 25%. However, on May 10, the price of “SHIB” (Shiba Inu coin), a cottage coin imitating Dogcoin, tripled in a single day and made it to the top of Weibo’s hot search, and its topic was even more hotly discussed than Dogcoin.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

Like (0)
Donate Buy me a coffee Buy me a coffee
Previous 2021-05-10 06:11
Next 2021-05-10 06:14

Related articles