I am sure not everybody understands what exactly is happening on the stock market and why this is important moment in world's history and how this can be applied on the Crypto Market. It is important that you understand what's the meaning behind "short trading". Basically this is when you borrow a stock from your broker, sell it at current price and hope that it's price drop, then you can buy it back at the lower price, return it to the original owner and keep the difference between the selling and buying price.
Here's an example - you borrow the ABC stock from your broker(for which you pay some fees) and immediately sell it at it's current price of 1000$ to someone else. Then you sit back and hope that the price will drop. Let's say it drops to 750$, at this point you buy back the ABC stock at the new price and refund it back to your broker and you are left with 250$. You will probably pay about 0.5% of fee for the service to the broker, but that's still 248.75$ USD pure profit. However, there is a risk that the ABC stock might go up instead, lets say to 1500$, at this point you decide to cut your losses and you buy it back at this price and you will have loss of 500$ and the change that you paid for fees to borrow the stock from your broker. The bad part is that the losses you might have are almost unlimited... A stock might grow limitless.
And about the events about Gamestop. Weeks ago, someone on reddit forums r/wallstreetbets posted about a WallStreet hedge fund has placed humongous amount of short trades against Gamestop. The redditors decided to group up and bet together on Gamestop so they push the stocks of as high as possible. So the price jumped from around 15$ to over 400$ in just few days. So the losses to of the hedge fund went over their total net worth of 13.1 billion USD. At some point the Wallstreet company was forced to buy back the stocks of Gamestop on a much higher price so they can close their trades. This by itself has driven the stocks even higher. This maneuver is caller "short squeeze" Currently the hedge fund is filing for bankruptcy and the redditors from r/wallstreetbets are combining strength to go after other hedge funds with big exposures in short trades to squeeze them.
Ofcourse, the people working on Wallstreet are not happy at all and are claiming that the public joining together in this manner should be illegal.
What will happen, the future will show. But without a doubt this is not the end of the story.
Just on a side note. Most of you probably noticed the currently top Cryptocurrency on Coinmarketcap.
It's all connected.
