• The past week has been quite a wild one, mostly characterized by the rise in importance of the Wall Street Bets crowd and the downfall of Robinhood. The traditional equities market has started to resemble the crypto market, in some ways – many retail users have pursued buying products with giant short interest (like GME and SLV), intending to force the large, Wall Street firms with large short positions to buy back and drive the prices up even more. This is traditionally called a “short squeeze,” and this is perhaps the most well-publicized one ever, mostly taking place via a grassroots internet-based movement against “the establishment.” And this mechanism is fairly similar to the liquidations which so often drive price moves in crypto – high leverage creates momentum when a coin moves up (say) and short positions are forced to buy back via liquidations engines.

  • And the two effects sort of came together for a number of altcoins this week – notably, coins like DOGE, XLM, and XRP. DOGE is the clearest example – it’s a coin that’s explicitly popular on Wall Street Bets itself, it (used to be) on Robinhood, and there was a lot of buying interest in it – which drove a ton of buying liquidations, creating momentum upward. The same happened for XRP, for instance – instead of the “Robinhood banned DOGE, let’s buy” narrative, this was “the U.S. banned XRP.” Either way, there was a lot of upward price movement for all these coins caused inorganically, and all of GME, DOGE, XRP have fallen quite a bit since as a result of no one actually thinking they’re “fair” that high. As this new culture keeps developing, these kinds of coins that are popular online will likely remain relevant, whichever way they move – it’s very similar to the “alt season” from early 2018.

  • Meanwhile, major coins have been a lot quieter, though hardly quiet globally – and they’ve also been dominated by this Wall Street Bets, retail-driven culture. Elon Musk changed his Twitter bio to include the word “Bitcoin” this week and BTC shot up (and then later back down). Otherwise, BTC (and other major coins) have slowly risen – perhaps still from the generic U.S.-based inflows, perhaps from speculation that this Wall Street Bets culture is great for crypto because users will be driven from regulated U.S. equities (which can, e.g., get trading halted) and into the crypto markets. ETH reached a new all-time high, for instance – it will be interesting to see how much the new flow ends up impacting the bigger coins longer-term.