US stock investors are hurt, but the crypto market may be the biggest winner

Author | Qin Xiaofeng Editor | Mandy
Produced by | Odaily Planet Daily (ID: o-daily)

Dogecoin (DOGE) is going crazy.

OKEx market data shows that in the past 48 hours, DOGE has risen wildly from 0.00726 USDT to a maximum of 0.084 USDT, with a maximum increase of 1057%; Coingecko data shows that DOGE's market value has ranked among the top seven, surpassing LTC and BCH.

According to data from crypto data provider The TIE, DOGE's daily tweet volume soared 1,787% yesterday. In 24 hours, there were a total of 89,991 tweets about DOGE, the first time that the daily tweet volume of altcoins surpassed Bitcoin. Many investors lamented: The Year of the Ox has turned into the Year of the Dog, and the beginning of 2021 is already magical.

Background: US retail investors flock to the cryptocurrency market, boosting the price of Dogecoin

As a former experimental product, Dogecoin has gone from being highly sought after to gradually declining in the past seven years, and its market value has always been ranked behind 200. The popularity of Dogecoin in the past two days is mainly related to the largest "retail investors vs. institutions" decisive battle in the history of the U.S. stock market, namely the "GME (GameStop) defense battle."

To give a brief introduction, GameStop is a sunset industry stock in the US stock market, which was shorted by Melvin Capital and Citron. This is also a common practice in the Wall Street capital market.

However, GameStop has a group of die-hard fans on the Reddit forum. In order to protect their childhood memories, they began to buy GameStop company stocks in groups to fight against short-selling institutions, which became a spectacle in the capital market this year.

It is generally difficult for retail investors to have a good ending when they fight against institutions, but this time the retail investors are not ordinary. This group of retail investors is in a sector called WallStreetBets (WSB for short), which has 2.8 million users. The viewpoint of this group of people in stock trading is: life is only once, if you win, you can live in a villa by the sea, and if you lose, you can jump into the sea.

As a result of the unremitting efforts of retail investors, GameStop's stock price soared from $19 at the beginning of the year to a high of $483 in the past two days. Institutions lost billions of dollars and announced their surrender. GameStop soared wildly, from a low of $2.57 to a high of $483, becoming a "short squeeze concept stock."

Wall Street retail investors are celebrating their overwhelming victory and looking for the next short squeeze. Short squeezes have occurred in global markets (US stocks, Hong Kong stocks, Asia-Pacific stock markets, gold and silver markets, etc.), and retail investors are in high spirits.

But soon, US regulators set their sights on this unusual stock and the retail investors' strategy.

Massachusetts Secretary of State William Galvin, who is in charge of securities regulation, said he was watching the stock closely. "The situation now indicates that there is a systemic error in the options trading of this stock."

Adena Friedman, CEO of Nasdaq, also said: We will monitor comments on social media, and if we find that the comments are related to the abnormal performance of the stock, we will suspend stock trading.

Since then, GME, AMC and other stocks have been restricted from trading on various trading platforms in the early hours of this morning, causing heavy losses to retail investors. This move has caused strong dissatisfaction among a number of traders. Could it be that the US regulators are so blatantly standing with the institutions and ignoring the lives of retail investors? Who gave Robinhood and other platforms the power to stop trading?

On Thursday, Robinhood was hit with a class-action lawsuit from retail investors, who demanded compensation for losses caused by trading disruptions. Robinhood did not immediately respond to requests for comment on the lawsuits.

Twitter user @Richl commented: "Ordinary people just used their own money to buy the stocks they liked, causing Wall Street short-selling institutions to lose a little money. Today they blocked these stock transactions, forcing retail investors to spit out all the money they earned."

*****: “Iron Man” calls for DOGE to be pulled up

The GME incident is the reason why Dogecoin DOGE is rising wildly today.

There are two main reasons why retail investors in the U.S. stock market choose DOGE when entering the crypto market:

One is that “WSB Chairman” called for DOGE yesterday.

Due to the GME incident, the WallStreetBets forum has attracted much attention, and the Twitter user "WSB Chairman" with 350,000 followers was mistakenly thought to be the moderator of the WallStreetBets forum (the real moderator is called wsb mod).

When GME skyrocketed, WSB also posted his account, showing a profit of $17 million. He told his followers that they could do the same, causing Reddit to become a coin in a second, with retail investors posting their orders one after another.

Therefore, when the WSB Chairman asked about the situation of DOGE, many cryptocurrency investors once again followed suit in the crypto market, directly pushing the price of DOGE up by 200% yesterday.

Second, Tesla founder Elon Musk called for DOGE.

Among all the well-known bigwigs, Elon Musk has always stood with the leeks. This week, he supported U.S. Representative Alexandria Ocasio-Cortez's protest against Robinhood. He also led many public figures to express similar positions.

In fact, when Tesla first went public, it was always a "cash machine" in the eyes of short-selling institutions. Musk suffered greatly from it and had no good feelings towards short-selling institutions. In the GME incident, Musk posted: "You can't sell a house that doesn't belong to you, you can't sell a car that doesn't belong to you, but you can't sell stocks that don't belong to you!? This is outrageous - short selling is a scam."

This morning, after GME stock trading was suspended, Musk posted a photo of a dog, which was interpreted by a group of Dogecoin fans as a call for Dogecoin. As shown below:

Musk's support for Dogecoin can be traced back to April 2019, when he changed his Twitter account profile to "Former CEO of Dogecoin" and tweeted: "Dogecoin may be my favorite cryptocurrency. It's cool."

Since then, Musk has praised Dogecoin every once in a while, and each time it has caused DOGE to rise by more than 20%.

In July this year, when asked about Bitcoin, Musk replied on Twitter that he "only buys Dogecoin" and posted a picture of a "Dogecoin sandstorm" sweeping across a city called "Global Financial System"; On December 20, Musk mentioned DOGE again on Twitter and said that Bitcoin is almost as nonsense as legal currency.

As the brightest rising star in the financial technology market this year, Musk's call for Dogecoin today has also attracted many retail investors in the US stock market to the crypto market, and Dogecoin has become their first choice. Coingecko data shows that the trading volume of Dogecoin in the past 24 hours has reached 49 billion US dollars, mainly concentrated in the three major trading platforms of Binance, OKEx and Huobi.

Who is the next Dogecoin?

After DOGE pulled up yesterday, many smart investors smelled the scent of money and started to increase leverage contracts to go long.

An investor told Odaily Planet Daily that he only spent a few hundred dollars and earned tens of thousands of dollars, with a return rate of more than 100 times a day. The investment is as follows:

However, Odaily Planet Daily must remind all investors that DOGE has already shown a frenzy trend, so be cautious in chasing the rise. Otherwise, if you bought it in the Year of the Ox, you may have to wait until the next Year of the Dog to get out of the trap.

But compared with the severe manipulation of U.S. stocks, the crypto market looks like a relatively fair, open, and retail-friendly market, and it is not ruled out that more retail investors in the U.S. stock market will flock in.

So who is most likely to take over from Dogecoin and become the next explosive currency?

Judging from the GME incident and Dogecoin, the currencies sought after by retail investors basically have two major characteristics: one is that they have existed for a long time, basically more than two years, and have a certain sentimental orientation and symbolize the concept of fairness; the other is that the market value is relatively low, less than 100 million US dollars, which is relatively undervalued and easy to manipulate.

However, even if you can find such a currency, please invest with caution and control leverage. The risks in the currency market are no less than those in the stock market.

Finally, a list of alternatives is attached: Reddit users usually buy coins on Robinhood, which currently has only 17 coins: BSV, OMG, LSK, BTG, DASH, XMR, ZEC, NEO, XLM, ETC, QTUM, XRP, DOGE, LTC, BCH, ETH, and BTC.

Who will be the next one? How long can the bubble in the capital market last?

Keep buying, buy, buy. What else can retail investors do?