All about the GameStop Drama, Dogecoin and a New Market Paradigm

  • 22nd Feb'21
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The month of February is commonly supposed to be the month of Love. Although, in the US, apparently it has been a month full of Wall Street Drama due to the series of events that have taken place from January.

Are you curious? Let me squeeze out all the juice we know.

Starting with GameStop, just to keep up with the chronology of the events.


All about the GameStop, Reddit, and Robinhood Drama

For all those of you who are not aware of what is GameStop, Robinhood, or Reddit and what the fuss is all about, let me do the honours for you.


To begin with, you need to know a few names that will be thrown around a lot in this episode.

1. GameStop 

GameStop is an American video game and gaming merchandise retailer that sells video games and other electronic items. It is heavily affected by the Covid Pandemic.

2. Reddit

Reddit is like a social media website similar to Facebook or Twitter. 

Reddit has forums where people discuss topics they are interested in, more so like a network of communities.

So for all those interested in trading, have a forum named WallStreetBets where people discuss stocks and where to invest. It currently has over 9 million members.

3. Robinhood

Robinhood is an investment app specially designed for beginners who want an easy-to-use interface with no commission costs. It permits you to trade in stocks, options, ETFs, and cryptocurrencies commission-free.

4. Short Selling

Short Selling is a concept where an investor borrows a stock to sell it when the prices are high, hoping that the prices will drop. Once the price drops, they buy back the shares and return them to the lender, keeping the difference between the selling price and buying price as their profit.



Okay, let’s get into the details of this Drama.


How It Started?

- This all started when Ryan Cohen, co-founder and former CEO of Chewy Inc, invested $76 Million(9 Million shares purchased) at the end of last year. Around this time, the hedge fund holders betted that the prices of this gaming company will fall i.e. targeted short selling. 

- In early January, GameStop announced that Ryan and his two other former Chewy colleagues will be taking three seats on the board of the company. This triggered the jump in share prices. 

- The members of the Reddit community “Wall Street Bets” started buying shares i.e betting against the Wall Street investors, increasing its share price from $17 on January 1 to $469 on January 28th.

- Further adding fuel to it, Elon Musk(CEO of Tesla) tweeted “Gamestonk” on January 27th, boosting the prices to surge even more.

- Now, this completely changed the game for large hedge fund holders and Big Wall Street Investors, which resulted in huge losses for them.

- On January 28th, 2021, Robinhood briefly suspended buying stocks of GameStop and seven other companies after noticing an extraordinary rise in their value. After this, the stock prices of GameStop plunged miserably.

- This move by Robinhood and other trading apps left the market extremely volatile, which grabbed the attention of Social media and Congress, everyone criticising this unfair practice. 

- The huge rebellion even made the extreme opposite US politicians- Republican Ted Cruz and Democrat Alexandria Ocasio-Cortez agree on calling for a hearing to know more about the decision to halt the trades. 



Discover Now: Could Coinbase Be the Biggest IPO in 2021?


How It's Going?

Well, it doesn’t follow the lines of the TikTok trend where you see a series of beautiful events that makes you emotional. Instead, it went the opposite way for GameStop and Robinhood.

- The Buying ban by the Robinhood apps whose mission is to “democratize finance for all” acted contrary and received furious backlash. This led to a huge Reddit Rebellion on Social Media that became viral, catching the eyes of Congress and a hearing was demanded. 

- The US House Financial Services Committee had held a hearing on 18th February 2021 and was titled “Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide''. The hearing was held to know about the volatility in GameStop and the other seven stocks, Robinhood’s decision to temporarily suspend trading in these stocks.


- What happened at the GameStop Hearing?

  • Vlad Tenev, the co-founder of the Robinhood app, apologised to its customers. Further, he said that the firm was forced to temporarily suspend buying shares in GameStop and other stocks due to financial requirements because of the rise in trading. 

Robinhood is compelled to place a deposit with Clearinghouse until trades are settled between buyers and sellers to cover the risks. On January 28th, the company faced a deficit of approx $3.4 Billion due to this spurt in prices of stocks which led to the temporary halt in trading. 

  • The founder of Citadel Securities, Kenneth Griffin, denied any discussions with Robinhood about restricting trade in GameStop and other “meme” stocks.

Citadel Securities is one of the biggest revenue sources of Robinhood as they handle their orders. Kenneth Griffin had made an investment of $2 Billion in Melvin Capital on January 25th which suffered heavy losses. This has raised several questions regarding Citadel’s intervention in suspending the GameStop trade.

  • Gabriel Plotkin, fund manager of Melvin Capital Hedge Fund, who lost 53% of its value, defended its strategy of shorting the GameStop stock.
  • A YouTuber, popularly known as “Roaring Kitty”, had made a Youtube video that apparently led to the purchase of the GameStop shares, and was charged for market manipulation, testified as well. He denied the charges and said his investment and the video has nothing to do with this insane increase in trading as the video was for educational purposes, and he still believes in the potential turnaround of the stock.
  • Other key players that testified at the hearing denied wrongdoing in the affair of the massive price surge of GameStop and other stocks in January.

This whole episode has led to serious questioning about fairness in the US's financial markets.



Dogecoin is a cryptocurrency invented by software engineers Billy Markus and Jackson Palmer. Approximately 113 billion coins have already been mined.

- On 8th February 2021, Tesla announced its $1.5 Billion investment in Bitcoin and has further asserted that they will accept bitcoin as a mode of payment for their products.

- After showing full support to Bitcoin, Tesla CEO seems to have Dogecoin covered too.

- On 10th February 2021, Elon tweeted that he has bought Dogecoin for his son.



- This followed by a tweet on February 15th that said, “If major Dogecoin holders sell most of their coins, it will get my full support. Too much concentration is the only real issue IMO.” (imo = in my opinion) and “I will literally pay actual $ if they just void their accounts.”

- Earlier this month, Musk created a 50% surge in Dogecoin’s price in just 24 hours by a single word tweet “Doge.”

- In subsequent tweets, the Tesla and SpaceX CEO said "Dogecoin is people's crypto" and "No highs, no lows, only Doge".

Cryptocurrencies are the talk of the town. Bitcoin generally took away the audience but now with Elon Musk’s constant tweets about Dogecoin, people are becoming more aware of this one. 

Must Read: Why 2021 Is Set To Be Even Bigger For Bitcoin?


New Market Paradigm

- Cryptocurrency, the digital currency, could be our future currency if the issues of our current centralized banking system aren’t resolved. 

- Cryptocurrency, as a digital currency has altered the concept of “value”.

- Crypto is modern money because the roots of the concept are born from the retail market. It is targeting audiences that are seeking an alternative to the traditional system.

- Although the US has not yet approved cryptocurrency and India is planning to ban it, looking at how volatile the cryptocurrency market is. The impact is huge and countries are not yet ready for it but it's hard to stop the spread though.

- With more and more investors entering the financial market and taking interest in the market, the lines are being blurred between institutional investors and retail investors. Retail investors can create as much impact as institutional investors. It has been proved by the GameStop incident.

All these chains of events have assured that new investors will set their own rules for themselves. The gap between the large and small investors will bridge faster. With awareness and informed decisions, the possibility of unfair practices will be reduced.


Let us know your views in the comments section below.


To read more about cryptocurrency, refer to the below-given links:

7 Reasons Why Bitcoin Will Hit $50,000 In 2021

Well, it has already neared $50,000 as of 14th February 2021, find out the reasons why it did.

Dreaming Of Becoming A Bitcoin Billionaire?

Bitcoin is a high-risk investment sector. Before you dream of becoming a Bitcoin Billionaire, ask yourself three questions. Read more

5 Crypto Investment Mistakes You Should Avoid in 2021

Bitcoin is still very confusing to many, exposing them to investments resulting in losses. To educate yourself with 5 such crypto mistakes that you should avoid, read more

Crypto-To-Cash Conversions

To know how to convert cryptocurrency into cash, click here


We, at OpenGrowth, are continually looking for trending startups in the ecosystem. If you want to know any further information about the startup ecosystem or have any mind-boggling ideas, do refer to the other blogs at OpenGrowth. If you have any suggestions, do let us know in the comment section below.


*Note: The content published above was made in collaboration with our members.

About the author:

Ayushi Vanzara, OpenGrowth Content Team

Ayushi is currently pursuing Chartered Accountancy. No secrets there that she loves to read!  She believes words have the power of healing and is a medium that can convey like no other. She hopes to connect with people through her empathy, thoughtfulness, and by adding value to their lives.

Post Your Comment
Kashish Jain

Good start!

2021-02-27 18:45:44

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