As we approach the anniversary of the sneeze, it should be clear to everyone in this journey that the shorts have had a much stronger control of the situation than we give them credit for. If there's one thing that I have learned from this saga is that we should never get complacent. We keep assuming that the house of cards is about to fall, but it never happens. We fail to realize that SHFs are fighting for their survival, whereas we are mostly fighting for tendies and justice. I strongly believe that DRS is the only way to force shorts to leave the stock alone. This post is meant as a counter-argument to the claim that NFT marketplace announcement will launch the rocket.
TL;DR I am making a prediction that a certain sequence of events will happen once GameStop announces its NFT marketplace. The opportunity to buy GME at super cheap prices is about to run out, and the tax implications of DRSing some type of shares (e.g. IRA) are gonna get hefty very soon. We might also be headed into a long long winter where the price of GME stays in the thousands but without the rocket leaving the stratosphere. I am conjecturing that all of this will happen because of the fall of Tether.
Pre-Announcement (Easy Mode)
As GME longs, we are living in the best of times. The stock has been trading at such a huge discount that people have been growing their holdings at an insane rate. SHFs wanted to control the narrative surrounding the anniversary of the sneeze, so they have been attacking the stock price and calling GME holders as losers and conspiracy theorists on all news channels. It comes at a price though. Retail has been lapping up as many shares as they can and DRSing many of these shares. Fortunately for us, Ryan Cohen understands how to play the game. It's likely GameStop is delaying any and every positive news simply to let SHFs do their short attacks. Retail gets to own more GME. Impatient investors leave the market and are replaced by diamond-handed apes who will hold the stock when the true test begins. And on top of all this, it strengthens the case that shorts were manipulating the stock without any news from the company.
The NFT MarketPlace Announcement (Medium Mode)
Expect the stock to start its rapid ascent as soon as the announcement is made. Every single one of you who is saving their ammo to buy GME below some price P is gonna hate themselves for missing out on the discount when it was readily available at 10-20% more than P. Once the rally begins, every passing day your buying power will diminish and you will be crying tears for saving some of the ammo.
Day traders who were short will get a call from Marge and might see their entire portfolio get liquidated. Expect to see news that many hedge funds went down because they were short the stock. They will simply let a few small and medium-sized hedge funds fail while claiming that the reported short interest of 20M has been closed. Under the hood, big asset management companies (think Fidelity, Vanguard, and BlackRock) and big funds (think Citadel and Susquehanna) would have absorbed the obligations of these smaller funds. I strongly believe that prime brokers (such as Goldman, JPM, Credit Suisse, BofA etc.) won't yet enter the scene because their role in this saga comes when DTC is about to blow up. Until then they will try to distance themselves from the mess that they have helped create.
I don't know how much money the short side has, so my calculations could be totally off. I am expecting the price to go above 1k, but stay well within 2-3k. If shorts have an obligation to buy back 100M shares, then the amount of money they need to close 100M shorts at this price is like 100-300 billion. This is a huge sum, but peanuts compared to what they will have to pay during MOASS. I am also expecting that a significant number of paperhands will exit the stock at these prices, so SHFs might have to cough up (say) 20-50 billion dollars to pay paperhands. Again, this is a big amount of money to lose during any other circumstance, but it's worth it for them to continue the ponzi scheme.
Expect MSM to give garbage advice at this time. They will publish articles with every possible view (except MOASS) to cover their bases. You will hear them sing praises about GameStop's tech transformation and how the company could be the next big thing on the market. They will even adjust GME's target price to 1069 to hype new retail investors to enter the market. In the midst of all this, there will be debates on whether the GME rally is supported by fundamentals or simply due to the NFT hype. All of you have already noticed media campaigns to showcase NFTs as some stupid technology where you pay a lot of money for owning a jpeg of an ape or that it's a front for illegal operations. Many financial experts will say that NFTs are cool but not useful enough to justify a stock price of above 1k. Most common people who have heard of NFTs through MSM will look at the 5x-30x explosion in stock price and conclude that it's just one of those bubbles again. They will stay away from investing in GME because to them the upside is not worth the downside.
I don't know how long this phase will last but what I know is that the rate of buying shares through ComputerShare will drop like crazy. Once we enter this phase, expect the DRS train to come to a halt. There will be many paperhands who will sell their brokerage shares to take profit. Efforts to spread the word about DRS will fall on deaf ears because it will be drowned out by people celebrating that the GME squeeze is over and that they bought a lambo by selling half of their portfolio. Many popular YouTubers will be advising their viewers to sell some part of their portfolio to realize profits and let the rest ride for MOASS. This will be done to decrease the short exposure to under a few tens of millions (mostly in the hands of non-paperhands and new investors). I will explain shortly why non-paperhand is not the same as a diamondhand.
Note that the sole objective of SHFs during this phase is to kill the DRS momentum. DRS is their Achilles heel. They are currently getting fucked hard due to the insane rate of DRS and are secretly hoping for some strong news from GameStop to allow the price to shoot up.
UnTethered (Hard Mode)
Some context: For those who are unaware, Tether is a crypto company that offers stable coins in exchange for fiat currency (and other assets). Tether offers stable coins for USD, Euros, and Chinese Yuan. In principle, a stable coin is supposed to be pegged to an underlying currency. For example, 1 USDT token = 1 US dollar always.
Why would people convert their fiat currency to stable coins? The idea is that it's easier to perform transactions on the Ethereum blockchain using stable coins than it is with fiat currencies. You convert your fiat currency to a crypto asset that's super liquid so that you can transact using the liquid instrument to save on fees and such. Think of it like a prepaid card that you have loaded with 1000 USD and now you own 1000 tokens to buy and sell in the crypto space in exchange for other crypto assets. Whenever you wanna leave the Tether ecosystem, you go to Tether and ask them to exchange your Tether tokens for fiat currency and they will happily oblige. I am kidding. They can't, won't, and don't intend to oblige on most of their contracts. Let me quote something from Wikipedia to give you a glimpse on why Tether is a ponzi scheme waiting to blow up the moment there's a bank run on its tokens.
While, according to its 2021 settlement with the New York Attorney General Letitia James, "Tether represents to users that any holder of tethers can redeem them from Tether the company at the rate of one tether for one U.S. dollar", Tether Limited as of 2017 stated that owners of tethers have no contractual right, other legal claims, or guarantee that tethers will or can be redeemed or exchanged for dollars. On 30 April 2019, Tether Limited's lawyer claimed that each tether was backed by $0.74 in cash and cash equivalents. In May 2021, Tether published a report showing that only 2.9% of Tether was backed by cash, with over 65% backed by commercial paper.
Let me also share a pay-walled Bloomberg article for those who wanna read more.
We can all get a sense of where this is headed. They are taking fresh money from naive investors and using it to pay for redemptions of their stable coins. The music stops once the redemptions exceed what they have on hand.
Ok ok, so how is all this connected to GME?
Let me make an argument on how SHFs will use the fall of Tether to attack GameStop. Tether has currently offered 78 billion USDT tokens and 20 billion Chinese Yuan tokens. It's fair to say that there's some 40-50 billion US dollars worth of dumb money who don't know what they have signed up for. At an average of 4-5k USD that's a solid 10 million naive investors who are gonna get burned when Tether falls. Since Tether handles 60-70% of crypto volume, it's obvious that once this financial backing goes poof, we will see a crash in the crypto market like we have never seen before. This will be the ultimate rug pull.
I am not saying that crypto will be worthless. I am saying that crypto will appear worthless in the short term. Every single financial pundit will be on MSM with their "I told you so" stories. How crypto is this one giant ponzi scheme where everyone was speculating with no fundamentals. Everyone's crypto-skeptic acquaintance/friend will mock their crypto-loving acquaintance/friend to no end. Meanwhile true crypto investors' cries of not your keys, not your crypto will fall on deaf ears. Most people are dumb and they don't understand that giving custody of your crypto assets to institutions backed by stable coins is as good as trusting a stranger on the internet with your crypto keys. Times are good and everyone's getting a cut for staking their crypto, so no one is worried about a crypto custodian going tits up. The music is about to stop, and tens of millions (possibly over 100 million) of people are in for a life lesson on why hardcore crypto investors regularly scream NOT YOUR KEYS, NOT YOUR CRYPTO.
Anyway, dumb people are often colossally dumb. They don't understand that a crypto custodian failing is the very reason why one should only own crypto in their name directly (like DRS). They will think that anything and everything in the crypto world is a ponzi scheme and will want to get out completely. Decentralized exchanges will be considered ponzis. NFTs will be considered ponzis. With not enough institutional backing, sellers will crash the market. Retail investors who are pro crypto will not be able to offer sufficient resistance because they don't have deep pockets. Without 100-200 billion dollars handy, it's simply impossible to maintain bitcoin at a price above 10k USD say. As the crypto market crashes, more investors will want to get out (or are forced to get out), and the crash continues.
Side note: Apes who are entrusting their IRA shares to a custodian are in a similar situation. I am not calling these apes dumb because, unlike crypto, IRAs are backed by some 500k-1M insurance.
Coming back to GME, how will the fall of Tether impact our beloved stock?
I am conjecturing that as soon as Tether falls, GME will fall by 30-40% in a single day. The price will not come all the way down to 100 or 200 because it will reinitiate the DRS train. The price will likely stay above 1k, but the outlook of the company's potential revenue stream from the NFT marketplace will essentially appear dead on arrival.
Why do I call this phase as the hardest phase? Two kinds of investors will be tested here. First, FOMOers who entered the market on NFT hype will sell at a loss and give some free money to SHFs. Second, some "diamondhands" who already started dreaming of owning a lambo and quitting their shitty jobs will not be able to handle this IV (Implied Vacation) crush. I would like to call these investors as Graphite-handed because the chemical composition of their hands looks like a diamond, but is anything but a diamond. They appear tough but are actually brittle. They shatter when there's an immense negative force applied on them right after they got hyped by the NFT-induced rally. Having said that, the sell-off of graphite-handed shares will still bleed SHFs dry. The (average) cost basis of a graphite-handed ape is likely in the 100-250 range, so if they sell at 1k, then they are still affecting a loss in SHF's books. This will be seen as a win by SHFs because they are willing to sell their mothers, if need be, to close their shorts at an average price of under 1-2k. Graphites will cost them anywhere from 50-200 billion dollars, but it's a price that shorts are willing to pay.
So apes, that's my thesis on how SHFs will securely place the GME rocket in an orbit around Earth. If the DRS number doesn't cross 30-40M within the next 6 months, then there's a high likelihood that we will remain in Earth's orbit for many many months (possibly another year or two) to come.
As always, don't let go of a good opportunity. Buy GME whenever you have sufficient money. DRS your GME shares when the tax implications are easier on your wallet. Also, a word of caution: don't think that you will outsmart SHFs by selling at the NFT peak and buying back after the fall of Tether. They can see all our moves and they know the size of their short position. They will maintain the stock at a price that triggers a net sell-off. Only diamondhands shall triumph through all this.
None of this is financial advice.
No comments:
Post a Comment