Now with the classical stock market you have so many opaque processes involved that you may never know for sure how many shares are in circulation without an in-depth investigation at the highest level.
I see your point, but I don't think the stock market (any aspect of it) acts like fractional reserve banking or whatever the theory is here (I haven't read the Reddit thread yet, but I will). That would be seriously illegal and yeah, if it were true it would turn the stock market on its head.
It's not like something being seriously illegal has ever stopped hedge funds and banks from taking these actions. If you get fined a few hundred mills for a few billions of profit it's just the cost of running business.
Additionally those kind of dealings seem to be incredibly easy to hide and under normal market conditions are not even noticable. Just look at Jim Cramer gloating about all the shit they've pulled under the SEC's watchful eye:
https://www.youtube.com/watch?v=VMuEis3byY4(unrelated to the hypothesis posted above, but you get the picture)
Don't get me wrong, I think this theory is highly speculative, but the mere possibility has serious implications.
If it turns out to be a false hypothesis, an insane conspiracy theory, if you will, it still goes to show that blockchain transparency goes a long way.
Yeah, except blockchain technology hasn't yet been adopted in the functioning of stock markets. I hope one day it will, but it seems like nobody with any power or pull on Wall Street is thinking of ways to do it.
Of course! The point I'm trying to make is that transparency and auditability seem to be a currently widely underestimated property of cryptocurrencies and decentralized smart contracts. Even privacy-focused coins are for the most part at least auditable.
The financial derivatives (futures and options) can be way more in quantity,compared to the stock market capitalization.
Yeah, that's not what this post is about though. If you had read OP you would know that this is about a detailed analysis of concrete examples how certain derivatives enable loopholes that are close to impossible to detect by the SEC. This is not a "options are complicated so they are bad" kind of post.
By the way,I'm still wondering how the members of a subreddit can mobilize billions of dollars,in order to pump stock prices and create a "short sqeeze".
The majority of long positions have been taken sub USD 20,- or even sub USD 10,-, long before the short squeeze even became a matter of earnest discussion. Many of these self-proclaimed autists and retards are used to doing risky plays and taking crazy positions in the 4-5 digits. Despite the self-deragotory lingo they usually display, they are not some random 15 year old kids playing with their pocket money, as most of the media might have you believe. "WSB is just some stupid kids" seems to be the new "Bitcoin is only used by criminals" at that point. I mean, some of them are, but the demographic is much wider than that.
People are aware that whales, including institutional investors such as Black Rock, are in play as well. The implications have been publicly discussed. I wouldn't be surprised though if r/wallstreetbets had managed to collectively get at least 20-30% of the available float, even before the hype. At pre-hype levels of 1.7MM subscribers and USD 20,- a share that amounts to an average of less than 10 shares per subscriber, or USD 200,-. I don't think that's unrealistic, especially considering that some have bought significantly more at significantly lower price points.
