'From Meme Stocks to Coins' Change in US Retail Investors... 100x Leverage as a Variable

Sharp Decline in Usage of US Retail Investor Hub 'WallStreetBets'
Crypto Discussion 'Crypto Currency' Posts on the Rise
Market Volatility Concerns Amid Up to 100x Margin Trading Allowed

[Asia Economy New York=Correspondent Baek Jong-min] A research case has emerged showing that individual investors in the United States are turning to cryptocurrency investment rather than stocks. However, concerns have also been raised that excessive leveraged trading is spreading and increasing market volatility.

A table comparing the changes in Bitcoin value following Elon Musk's statements and the number of posts uploaded to the community. (Source: Quiver Quantitative)

According to Quiver Quantitative, a research company, on the 25th (local time), posts on the 'Cryptocurrency' forum of the US online community 'Reddit' increased by as much as 82% from the beginning of this month until the 21st. On the 19th, when the Bitcoin price fell to $30,000, as many as 59,000 posts were made. On the 21st, 36,000 posts were uploaded in Cryptocurrency in one day.

While the number of investors active in Cryptocurrency surged, the number of users of 'WallStreetBets', mainly used by stock investors, noticeably decreased.

Posts on WallStreetBets decreased by 42% during the same period. The number of posts on the 21st was 13,000, which was about 30% of Cryptocurrency's volume.

WallStreetBets led the rise of so-called 'meme stocks' such as GameStop earlier this year, when individual investors united to confront institutional investors who engaged in short selling. In January, when the confrontation between individuals and short sellers was a hot topic, 430,000 posts were uploaded daily on WallStreetBets. Currently, the number of posts created daily has decreased by 97%.

This is interpreted as being due to WallStreetBets moderators blocking discussions about cryptocurrencies. Although the moderators changed their stance in April to allow discussions only about Bitcoin, Ethereum, and Dogecoin, it was already after users had turned away.

Since April, the number of posts about cryptocurrency has surpassed the number of posts on WallStreetBets.

Discussions about cryptocurrencies within Cryptocurrency continue to increase steadily. After surpassing the number of stock investment posts on WallStreetBets for the first time in mid-April, investors are communicating with others to gain new cryptocurrency investment ideas and using cyberspace as a place to vent during sharp price fluctuations.

Quiver Quantitative explained, "Compared to stock investors, coin investors are creating more topics of conversation."

A representative example is the recent dissatisfaction with Elon Musk, CEO of Tesla, who caused Bitcoin prices to fluctuate. On the day Musk announced Tesla's cancellation of Bitcoin payments, 65,000 posts mentioning Musk's name were made in Cryptocurrency.

Up to 100x Leverage Trading Compared to Principal... $12 Billion Forced Liquidation Last Week Amid Sharp Decline

As individual investments increase, concerns are also rising that excessive speculative trading is spreading and increasing market volatility.

Brian Kelly, CEO of BKCM, expressed concern in an interview with CNBC on the same day, saying, "The Asian exchange BitMEX allows up to 100 times leverage trading."

It is claimed that the recent multiple instances of Bitcoin and others fluctuating by 30% in a day are due to leveraged trading with 100 times the principal invested.

It is explained that rapid leveraged trading, which is impossible in the stock market, is taking place, and accounts falling into collateral deficiency are frequently liquidated whenever cryptocurrency prices fluctuate.

In fact, about $12 billion worth of cryptocurrency leveraged trading balances were liquidated during last week's cryptocurrency crash. As a result, about 800,000 cryptocurrency investment accounts disappeared.

Devin Ryan, a JP Morgan analyst, explained, "Once liquidation starts, it triggers more selling."

Meanwhile, on the same day, Bitcoin was trading at $38,000, up 1.5% with little volatility, Ethereum rose 4% to the $2,500 range, and Dogecoin increased 3% to 34 cents.

This content was produced with the assistance of AI translation services.