The bonobos got screwed – Since the beginning of the week, we’ve been witnessing a money rush. In this new episode of the WallStreetBets saga, the small holders are throwing themselves into money futures contracts and exploding its price. It seems that some of the Redditors have played the game of hedge funds without realizing it.
Money records its biggest increase since 2008!
Let’s start with the facts: since 1 February, Twitter and Reddit users have been calling for a repeat of the Gamestop (GME) operation on money. Crowds attracted by the lure of money have not been shy and have started a rush for money futures.
This crowd movement led to a massive rise in the price of money, the largest increase since the 2008 crisis. This rise is the 5th largest since 1980.
However, it turns out that Citadel has the 5th largest position on the iShares silver replicating ETF. Citadel is closely related to the WSB epic. Indeed, the fund is both a shareholder of Melvin Capital, which has suffered heavy losses on Gamestop (GME), and one of the main clients of Robinhood, one of the platforms most used by small U.S. holders to gain exposure to the stock market.
A FOMO orchestrated by the hedges funds ?
The announcement of Citadel’s important position on money immediately caused discord within WSB. The vast majority of forum users called on their peers not to trade money, whether in futures, physics or ETFs. But it’s too late, the damage is done, the price of money has soared by more than 20% since the beginning of the week.
The rise in the price of money makes the game of Citadel which ensures its gains in times of absolute uncertainty. Many observers agree that this move on money has been largely orchestrated by the players in positions on money.
This would be intended to distract users from their equity positions and to trigger an artificial inflation of Citadel’s positions with a rather masterful thumb of the nose. These remarks should be qualified. In fact, there were less than a million registered on the subreddit in question before January 2021.
With nearly 8 million registered at present, it would be absolutely wrong to consider this crowd as a homogenous entity advancing hand in hand towards a common goal. So there are dissensions, but also newcomers trying to start a trend on an asset on which they are already in a position. In conclusion, WallStreetBets, the main instigator of the new money rush? Not really, as you will have understood.