The meme stock phenomenon has thrown together the usually sober realm of stock trading and the energetic, entrepreneurial world of cryptocurrencies. Led by entrepreneurs from both sides, including Tesla CEO Elon Musk and Tron founder Justin Sun, could the meme stock movement prove to be a catalyst for mass crypto adoption?
Before 2021, it would be fair to say that the stock markets and the cryptocurrency markets were still a world apart. Traders came to the cryptocurrency markets to ride a rollercoaster of volatility, the likes of which aren’t usually found in the more staid world of stock trading. To coin an analogy, crypto was the anarchic younger cousin of the older and more gentrified world of stocks.
Until this year, when r/WallStreetBets unleashed merry hell with its GameStop shenanigans, proving just how disruptive a gang of retail traders with a Robinhood account and a raging appetite for extreme risk could become. Wall Street hedge fund managers looked on in horror while the WallStreetBets crowd pumped stocks like GameStop, AMC and Blackberry, forcing a short squeeze unlike any in history.
For Once, US Lawmakers Are On Side
At the time of writing, it’s still relatively early days in the Congressional hearing that came about as a result of Robinhood stopping trading on its platform. Without diving too far into the details of the event or the hearing itself, it’s already apparent that the scrutiny is falling on Robinhood and the fact that it stopped retail investors from being able to trade.
Based on previous tweets from across the political spectrum, namely Democrat Congresswoman Alexandria Ocasio-Cortez and Republican Senator Ted Cruz, there were some indicators that this might be the case. However, zooming out, the broader implications are intriguing - both for the stock markets and for the crypto markets, which are undoubtedly benefitting from the fallout of the WallStreetBets traders’ antics.
Firstly, it marks perhaps the first time in history that individual retail investors have had more control over the markets than Wall Street giants. It appears that Congress is united in its support for this state of affairs. The balance of power shifting to smaller investors, who are far more capricious in their investment decisions than Wall Street hedge funds tend to be, is bringing unprecedented volatility to the stock markets. The kind of volatility that crypto investors are more used to seeing.
Meme Stocks and Crypto - A Match Made in Heaven
It’s hardly surprising when you consider the demographics. The WallStreetBets crowd is virtually the same demographic as cryptocurrency users – digital natives, part of a vocal community on social media, trading from their screens at home and on the go. So it’s perhaps unsurprising that, combined with Elon Musk’s influence, the crypto markets also appear to be benefiting from all this madness.
Just as Elon, CEO of publicly traded companies, has been actively helping to pump crypto, members of the crypto community have been getting involved in the GameStop pump. Most notably, Tron’s Justin Sun, who confirmed that he had invested $10 million in GameStop, along with $1 million in AMC Entertainment. Speaking to Bloomberg, Sun stated he would hold onto his meme stocks even if they lost value because he believes that this moment represents a paradigm shift.
He spoke of the significance of memes in the crypto community, paying tribute to Elon Musk as "not only a company CEO, but he is also the representative of this kind of meme culture and the representative of this kind of new generation movement."
A Catalyst for Mainstream Adoption
Based on the insane bullish action we’re currently seeing in the cryptocurrency markets, it certainly seems as if this point in 2021 will come to represent a tipping point for mass adoption. And to give all credit to Justin Sun, he has done more than his fair share to help stimulate mass adoption of crypto and blockchain.
Whereas many platform and protocol founders tend to focus inwardly, Tron is behind projects including BitTorrent, video streaming service DLive, and now Sun is also launching a Clubhouse-type audio social app in China. These are the kind of use cases that have broad appeal beyond the pure cryptocurrency community and are likely to get blockchain more widely used than applications and services that cater to crypto converts.
The bull market has thrown the upper echelons of the cryptocurrency rankings into disarray, meaning that TRON (the token) has struggled to hold its position against the surge in other coins such as DOGE, shilled by Elon Musk himself. However, as a platform, Tron has been doing well lately. Usage of Tron-based USDT has recently overtaken Ethereum-based USDT in 2021, showing a higher transaction count. The shift indicates that stablecoin users prefer Tron-based tethers for faster settlement speeds and significantly lower fees, as Ethereum gas prices have been soaring recently.
Who knows how long the meme stocks craze will go on? But while it continues to create a buzz in the crypto markets and divert value from Wall Street to the everyman investor, then long may it continue. For once, US lawmakers seem to be coming down on the same side.