Last Thursday's article shared with everyone the rising trend on crypto-stock trading platforms, where users are squeezing out Wall Street short sellers.
On Friday, I saw some news online:
The CEO of the publicly listed company AMC expressed his dissatisfaction and anger with crypto-stock trading online and threatened to hire lawyers to launch an investigation. In response, the Robinhood CEO fired back on Twitter.
This incident began when AMC's stock was tokenized on Robinhood and paired with another meme coin. Because trading of this meme coin was so heated, it affected AMC's stock price, causing it to surge more than 20% before the U.S. stock market opened.
The anger from AMC’s CEO reveals a sign:
Crypto-stock trading has already begun to have a significant impact on the real market prices of US stocks, and this impact means that traditional forces, which hold secondary market pricing power, are beginning to be eroded and weakened.
As of the time of writing, AMC's market capitalization is around $2.2 to $2.3 billion. Among over 6,000 listed companies on the main US boards (including NYSE, NASDAQ, AMEX), its market cap is in the top 25%-30%.
From the perspective of the entire US stock market, this is not a small market cap.
There are over 4,000 listed companies whose market caps are smaller than AMC’s.
If even a company of this market cap is affected in such a way, it’s easy to imagine how companies with smaller market caps would fluctuate if they were also paired and traded with meme coins.
As I shared in last Thursday’s article, those small market cap companies are exactly where short sellers are crowded in.
No wonder some people have already set their sights on such targets, preparing to squeeze shorts on crypto-stock trading platforms.
In addition, compared to traditional trading markets, the leverage effect offered by crypto ecosystem derivative tools is even more exaggerated. Therefore, it’s easier to “leverage a small stake for big gains” within the crypto ecosystem.
With a real-world case like AMC, with a platform like crypto-stock trading, and with exaggerated leverage tools, all the necessary conditions for manipulation are in place. We’ll see more cases like AMC, and even more extreme ones, in the future.
In stock trading, pricing power on the secondary market has always been in the hands of traditional institutions—“making rain with a flip of the hand” aptly describes their monopoly over pricing.
But now, decentralized crypto-stock trading platforms are also starting to influence real stock prices. This control over price monopoly is beginning to falter—regardless of whether the rationale and emotions behind retail trading in crypto-stock platforms are rational, what’s undeniable is that retail traders are now having an unimaginable impact and are beginning to challenge traditional giants over pricing power.
From this perspective, this scenario perfectly embodies the crypto ecosystem’s spirit of freedom, wildness, reliance on code, and disregard for authority.
However, the threat of complaints from AMC’s CEO in this case once again raises my long-standing concern over a hidden risk with RWA:
No matter the outcome of this investigation, it highlights the biggest weakness in this scenario: the intrinsic value and operation of stock tokens remain ultimately in the hands of centralized institutions.
If the SEC determines that tokenizing AMC stock on Robinhood is illegal, then all previous and subsequent trades involving the AMC stock token become invalid.
And even if the SEC deems Robinhood’s actions legal, I suspect regulators are unlikely to let such actions go unchecked. They will probably impose varying degrees of restrictions or raise barriers for the trading of such assets.
RWA can never be as free and unrestrained as purely native on-chain assets.
However, I estimate that even if regulators formally step in to investigate, it won’t happen that quickly. So, for some time to come, we will continue to see this kind of carnival and “feast.”
