Crazy Trading Alert: Bitcoin, Dogecoin Benefit From GameStop Mania

BATTLE BETWEEN RETAIL TRADERS AND WALL STREET SPILLS INTO CRYPTO

The bitcoin price, after dipping under $30,000 per bitcoin this week, suddenly leapt 20% to top $37,000 when Tesla CEO Elon Musk changed his Twitter bio to “#bitcoin” and posted: “In retrospect, it was inevitable.” This tweet was seen as a capstone to a week in which individual traders, many of which organized themselves on the subreddit r/WallStreetBets, collaborated to pump up beleaguered stocks such as GameStop, AMC and Blackberry that had been targets of short-sellers. However, the activity did not end there, as Reddit users on the r/CryptoCurrency and r/SatoshiStreetBets discussions referenced the r/WallStreetBets’ actions and turned their sights on the prominent meme-crypto currency dogecoin, causing it to surge 450% in the last 48 hours.

In reaction to this unusual movement, leading brokers, such as Robinhood and WeBull, suspended trading of certain securities (Robinhood also placed restrictions on crypto trading), which generated widespread outrage across individual investors who felt that these steps were taken largely to protect partner hedge funds and institutions that were short these stocks and had to book losses. As these dynamics played out over the week, it has led some to call for a shift over to decentralized exchanges and censorship-resistant trading in order to avoid the pressure of a coordinated, centralized financial system.

MORE CRYPTO INSTITUTIONS COMING?

Before this brief surge, bitcoin had settled into a relatively stable, albeit short-term downward sloping trend. Reasons for this recent direction include the fact that some institutions are waiting for additional hints or guidance from the Biden administration regarding how it will treat crypto over the next four years, while others are taking profits off of the table. That said, more buyers may be coming in the near term. Cathie Wood, the chief executive of Ark Investment Management, said in a recent interview, “I think we’re going to hear about more companies putting this hedge [bitcoin] on their balance sheet ... particularly tech companies that understand the technology and are comfortable with it...I believe there is no better hedge against inflation than bitcoin.”

Crypto curious companies will be getting some help next month, as major bitcoin-buyer MicroStrategy, led by bitcoin evangelist Michael Saylor, is gearing up to host a virtual “bitcoin corporate strategy” summit in the first week of February—designed to help other companies copy MicroStrategy’s bitcoin playbook.

FAST AND CHEAP PAYMENTS, HOLD THE PRIVACY

A new report released on Tuesday by the Center for a New American Security (CNAS) suggests that China’s new digital currency, which is currently in trial phases across the country, is being designed to allow for surveillance of all financial transactions throughout its society. According to the paper, the new CBDC will further the geopolitical ambitions of China—heralded as progress similar to other emerging technology fields such as AI or robotics.

Many of these conclusions, while compelling, should not be surprising to even casual China watchers who have been following their digital currency ambitions. The real question then becomes what can be done to protect user privacy, as it is possible that the personal data of American citizens and those of other free societies around the world could be compromised if they interact with the digital yuan. On that note, the paper proposes several recommendations, including a diplomacy initiative against China to encourage not using its new DC/EP system for punitive measures, monitoring risks of collection of data on U.S. persons by the system, and for the U.S. to lead on standard-setting for CBDCs internationally.

ELSEWHERE

Dogecoin soars 370% as Reddit group works to send the cryptocurrency ‘to the moon’ [CNN]

Coinbase to Become Publicly Traded, Announces Proposed Direct Listing of Shares [CoinDesk]

FTX created a Wall Street Bets index including GME, DOGE and others [CoinTelegraph]

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