How the GameStop Fiasco Exposed the Ultimate DeFi Bull Case

The past week has been an insane one in financial markets. A short squeeze of GameStop (GME) stock, amongst other heavily shorted stocks, saw retail traders take on a legion of hedge funds including industry heavyweights like Citadel and Point 72. What started as an attempt to exercise “deep value investing” eventually escalated into a culture war.

As the retail vs Wall Street narrative began to take off, GME stock price increased by roughly 5x. This price increase forced several hedge funds to cover their short positions and realize a sizable loss. Retail investors didn’t stop at GME; they started to orchestrate short squeezes on stocks that hedge funds shorted, like AMC Theatres (AMC) and Nokia (NOK).

Things were looking great for retail investors in long positions, until their brokerage firms – Robinhood, TD Ameritrade, E-Trade, etc – halted buying activity on GME and other stocks with heavy retail participation. At first, brokers didn’t offer a reasonable explanation for doing so, prompting the public to assume they were siding with the Wall Street establishment. It was only after a whole day of outrage that we found out this wasn’t some nefarious plot by retail brokers. Brokerage firms were told by their clearinghouses that they would be restricting buy orders for the stocks being short squeezed.

In the United States – and most other countries – stock market transactions settle two days after the order is confirmed. This is done to give brokers and exchanges adequate time to get shares to buyers and is commonly known a