Tesla and Bitcoin – The ultimate Trump short squeeze
Last Updated on 16 November 2024 by CryptoTips.eu
Short Sellers are companies that specialize in betting that a certain investment will be worth less in the future. These so-called Wall Street vultures have been experiencing a real ‘short squeeze’ for the past week or so. Bitcoin and Tesla (which many investors apparently also think are worth much less than their current value) are the culprits, and we haven’t seen such a big ‘short squeeze’ since the epic Gamestop one back in 2021.
GameStop
A ‘short squeeze’ happens when many people buy a certain good or currency together, causing everyone who was ‘short’ to have to cover their losses. While with a regular investment you can simply lose your bet, with a ‘short’ you can suffer an infinite loss as you do not know how high the share (or currency) will rise and you therefore have to invest more and more money to cover your losses.
Some social media fans on Reddit had noticed back in 2021 that a fairly large percentage of short sellers believed that GameStop, a chain of stores that sold video games, would go bankrupt due to the Covid-19 crisis. As the Reddit crowd (called WallStreetBets) knew that all those shorts had to cover their positions, they conspired together and bought millions of dollar worth of GameStop stock. The share price went through the roof, rising from $2 to as much as $100, the American media went wild ovetr the positive story and the Wall Street companies that had bet against GameStop lost billions.
A 2023 film about the absurd situation with Pete Davidson, Seth Rogen and Paul Dano became a so-called ‘sleeper hit’ hit in the United States (a film that did less well in theaters but very well on streaming sites afterwards)
Hollywood
Ever since the election victory of Donald Trump, both Tesla and Bitcoin shorters have been hit hard. Tesla went up 50% in just a few days, Bitcoin rose by about 35%.
The loss for Wall Street shorters who thought Bitcoin’s price would drop is not yet known (in March, when Bitcoin posted an ATH of $74,000, they lost $11 billion), but Tesla’s enormous rise already caused a loss of $8 billion in market value for short sellers.
If Hollywood makes a movie out of this one as well, I’ll definitely watch.
