The GameStop Uprising Is a Sign of Something Far Bigger to Come

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Posted by The Savvy Retiree on February 8, 2021 in Investing

Ah, the power of the people.

And the hypocrisy of Wall Street.

They clashed late last month. And if you will stick with me for a moment, I will explain why it is that the recent GameStop saga tells you why you should own bitcoin specifically and cryptocurrency in general.

Maybe you heard what happened recently with GameStop, the video game retailer that saw its stock price shoot the moon because a bunch of kids in an online forum decided they wanted to bring Wall Street down a notch. That episode laid bare the dark, screw-the-people underbelly we all know defines Wall Street, but which Wall Street is loath to show.

Quick backstory: On Reddit, a social media-style news aggregation site, there’s a thread called WallStreetBets, or WSB. For various reasons, WSB began attacking Wall Street’s short-sellers, the investors who bet that a company is going down for legitimate reasons ranging from over-valuation to failing business models. I’ve been part of Wall Street for decades, including 17 years writing about investing for The Wall Street Journal, and working as a trader and an analyst for a hedge fund. I can assure you that short-sellers are some of the smartest investors on the Street.

And yet the shorts, as they’re called, got schooled by a bunch of millennials and Gen Z investors who, like some kind of Mighty Morphing Power Rangers, supersized themselves into a singular, unbeatable foe. They drove the price of GameStop to more than $400 at one point from less than $20, all in a matter of days. Fortunes were made on Main Street even as fortunes were lost on Wall Street. Two hedge funds nearly collapsed.

Well, a number of corporate and Wall Street types caught the vapors, hyperventilating about market manipulation. They want government action to prevent such stock market unfairness.

To which I say: Hypocritical much?

Wall Street and banking was the epicenter the 2007 crash that gave us the worst economic crisis since the Great Depression. Yet no one on Wall Street was held accountable for widespread manipulation that created the crisis. Going back to at least the Clinton administration, Wall Street lobbied to change rules that ultimately gave rise to the crisis. As a direct result of the crisis, Wall Street received just shy of a gazillion dollars in governmental bailouts, even as Americans lost jobs, cars, houses, and retirement savings, and received little assistance from a corporate-focused Uncle Sam.

Welcome to the world of payback.

Millennials and Gen Z lived through the Great Recession. They directly experienced the iniquity, which fomented a wicked sense of righting social wrongs. Now, they’re old enough to own financial accounts, and they’re far, far savvier with social media and all things technological. And, so, they’re extracting revenge by attacking structures that have historically given power to the elite at the expense of the Everyman.

This is a 21st century French Revolution. But instead of a French noble derisively exclaiming “Let them eat cake” in reference to the impoverished and hungry masses of poor revolutionaries, it’s the revolutionaries who today are exclaiming “Let them eat Wonder Bread” to the billionaires who have exploited the system for their own benefit.

Which brings me back ’round to bitcoin and crypto in general…

Money, at least in physical form, is the playground of the elites. Always has been. The digital world—that’s where millennials and Gen Z cut their teeth, where they have the upper hand. GameStop is a very small, yet exceedingly visible and powerful example of decentralized democracy and decentralized finance in action.

The younger generations have little respect for a system that doesn’t respect the people, a fact we’re seeing play out at a financial, social, and political level all over the U.S. these days. They don’t trust government. They don’t trust institutions. They don’t trust banks. They don’t trust Wall Street. And they don’t inherently trust the dollar (a currency that faces a painful comeuppance, as I will explain in the March issue of our monthly newsletter).

What they do trust is technology. It’s accountable. It’s egalitarian. It cares not about income level, education, or credit score…or, frankly, any metric that supposedly defines a person’s place in society and their access to financial markets.

That’s bitcoin.

It’s decentralized money, democratized finance, and GameStop points to the very reason that bitcoin will be a currency: Because the internet said so.

By “internet,” I mean millennials and Gen Z globally, since that’s the space they rule. Their numbers are legion—largest generation in history—and they’re flocking to crypto because they trust it, despite the wild fluctuations that are currently common but which will quell at some point. No one can control bitcoin. No one can say, “Hey, let’s print another 42 kajillion bitcoin to save XYZ Bank” that some billionaire elites ran into the ground because of their greed and their lust for ripping off the American consumer.

We will likely never spend bitcoin as a daily currency—digital dollars are on the way sooner than you likely realize—but it’s certainly within the realm of probability that bitcoin emerges as a global reserve standard against which all other currencies trade.

Some will no doubt scoff at that and insist government will never allow this.

But government won’t have a say. Bitcoin is a permanent fixture of the interweb. Government has no way to stop bitcoin because it cannot control the entirety of the internet. And it’s not like government can shut off the internet without literally destroying the economy and wiping out consumer finances. Pursuing such a daft tactic would make Insurrection Day in D.C. look like a Chuck E. Cheese birthday party.

Besides—government likes bitcoin. It’s leading to a world of traceable transactions, and government loves traceability when it comes to money (hence, the pending arrival of digi-dollars).

So, all that said is why I regularly counsel everyone to own some bitcoin, Ethereum, and various other cryptos that have real-world uses. Otherwise, you’ll miss one of the biggest social and monetary shifts in history. You will miss GameStop on a far-more-epic scale.

By Jeff D. Opdyke