Redditors Are Turning to Crypto, Not GameStop, Amid Market Volatility
3 min read
Redditors on WallStreetBets (WSB), the cult-like finance subreddit that earned mainstream attention alongside the meteoric rise of “meme stocks” earlier this year, seem to be looking elsewhere for their financial advice—at least judging by the number of user comments over the past three weeks.
Meanwhile, the popular r/Cryptocurrency subreddit has gained some traction, with comment volumes soaring by as much as 82% between May 1 to May 21, according to data from the research company Quiver Quantitative.
“Investors still love a meme stock,” Interactive Brokers’ chief strategist, Steven Sosnick, told the Financial Times. “Crypto was a purer expression of meme trading. It took a lot of steam out of stock and options speculation.”
For the crypto subreddit, the record high of 59,000 comments in a single day fell on May 19, the same day that BTC plummeted below $40,000 for the first time in three months.
Two days later, r/Cryptocurrency saw nearly 36,000 daily comments, while the number of comments on WSB fell to just 13,000, recording a 42% dip over the three-week period.
Discussion on r/Cryptocurrency “has been steadily climbing,” said James Kardatzke, founder of Quiver Quantitative.
WSB made the headlines in January 2021 after a group of day traders banded together to push the price of GameStop up over 1,000% in a matter of just two weeks. The infamous short squeeze bankrupted some hedge funds and even crashed the popular online brokerage Robinhood app.
At its peak, WSB saw more than 430,000 comments in one day.
Despite pushing to launch a blockchain-powered decentralized app and its own governance token, WSB has restricted cryptocurrency discussions on the subreddit. Administrators argued that digital assets are “susceptible to scams or pump and dump schemes” as a reason for the ban.
They eventually reversed their stance on crypto in April, deciding “to allow for discussion about only BTC, ETH, and DOGE only.”
Investing in a narrative
As volatility hits the crypto markets, traders are also looking for new communities to express new investing ideas. Kardatzke argued that “many active retail investors don’t just want to see numbers in their Robinhood account go up, they also want to invest in a narrative.”
“Crypto is having a lot of volatility and more interesting storylines,” Kardatzke said.
One such storyline is the saga surrounding Elon Musk and his U-turn on BTC, which was among the reasons for the recent crypto market crash.
According to data from Quiver, immediately after Musk tweeted about Tesla’s decision to no longer accept BTC, the CEO of the electric car manufacturer was mentioned on r/Cryptocurrency more than 2,000 times, with over 65,000 mentions on that day alone.
Here's a look at how @elonmusk has impacted the price of BTC, and how often his name has been dropped on the r/CryptoCurrency forum pic.twitter.com/etLcCQm8vU
— Quiver Quantitative (@QuiverQuant) May 20, 2021
Despite the price of BTC somewhat recovering from last week’s crash, there’s still plenty of uncertainty on the markets, and volatility is likely to continue in the coming weeks.
And that means that there will be more talking points for crypto traders.
