SkyBridge Capital’s Anthony Scaramucci believes retail traders outsmarting hedge fund managers in controlling the GameStop stock’s destiny is a good sign for the leading decentralized cryptocurrency Bitcoin. In an interview, Scaramucci said the GameStop saga is a “proof of concept that Bitcoin is going to work.” The former White House communications director said the retail traders communicating through Reddit forums and Discord servers is a testament to decentralization beating centralization, which he said are the hedge fund managers in Wall Street.
Retail investors buy GameStop’s stocks to beat hedge fund legends.
A $13bn hedge fund has been left with huge losses after an army of amateur investors coordinating via social media platforms Reddit and Discord pumped up the price of video game retailer GameStop tenfold in just a few weeks. Members of the Reddit thread “wallstreetbets” decided to pile into GameStop to push up the share price to inflict losses on short-sellers, including Melvin Capital.
“How are you going to beat that decentralized crowd? That to me is more affirmation about decentralized finance,” Scaramucci told Bloomberg Wednesday.
GameStop lost money in five of the last six quarters amid the pandemic.
Once the place to go to for video game releases, GameStop has ceded a large market share to its consumers’ growing preference for digital downloads. It lost money in five of the last six quarters amid the pandemic. With that, hedge fund managers on Wall Street, including Melvin Capital, put a short position, betting that the GameStop stock will continue to decrease. However, the retail traders belonging to the Reddit forum r/WallStreetBets realized that they, who are holding long positions on GameStop (GME), actually control the supply of all the GME shares in circulation.