Hello and welcome to the latest Overbit Insights. This week's article focuses on the development of Retail Investors, where millions of retail traders banded together last year to create eye-popping rallies in highly shorted, nostalgic companies, including GameStop, AMC Theatres, and BlackBerry.
Over the year, day traders formed a new asset class called "meme stock" and regularly added new firms to the basket, including individual investors looking for the next short squeeze propelled a small Danish biotech company up to more than 1,300 per cent in a single day.
According to economists, those dramatic increases are likely to fade as retail traders look for new frontiers to match last year's significant gains.
"Meme stock rallies are going to taper off," Dan Raju, Tradier's cofounder and CEO, said. "In the previous year, the brokerage-as-a-service provider processed approximately $46 billion in assets for 2 million traders worldwide."
To top it all off, retail traders have "graduated" from simple equities trading and are now concentrating on more sophisticated assets such as Bitcoin. According to a poll released on Friday by Apex Fintech Solution, meme stocks began to lose traction around the end of 2021, with numerous famous names dropping in the top stock holdings ranks.
Meanwhile, according to Apex, metaverse equities have grabbed the curiosity of the youngest investors, with companies such as Facebook parent Meta, metaverse-platform Roblox, and Nike climbing in the ranks. The metaverse, which is still being defined, is a virtual world in which users interact as avatars and can game, interact, and trade with cryptocurrencies.
Retail Bitcoin trading volumes, according to Raju, are still extremely low, with most active traders making less than three trades each month. "2022 is going to be the year of regulation," Raju said. "Regulation is going to drive legitimacy," Raju continued, adding that it will "funnel into creating crypto volume." for conventional traders.
This week, we close out by looking at a recent report on cybercrime in crypto last year. The value of cryptocurrencies like Bitcoin and Ethereum has skyrocketed in the previous year, with Bitcoin increasing by 60% in 2021 and Ethereum increasing by 80%. It's certainly no surprise, therefore, that the persistent North Korean hackers who profit from the expanding crypto-economy enjoyed a banner year.
According to blockchain analysis firm Chainalysis, North Korean hackers stole $395 million in cryptocurrencies last year through seven hacks into cryptocurrency exchanges and investment organisations. The nine-figure sum represents a nearly $100 million increase over previous year's thefts by North Korean hacker groups, bringing their total haul in cryptocurrency to $1.5 billion over the last five years—not including the uncounted hundreds of millions more stolen from the traditional financial system.
"They've been very successful," says Erin Plante, a senior director of investigations at Chainalysis, whose report calls 2021 a "Banner year" for North Korean cryptocurrency thefts.
The findings show that North Korea's global serial robberies have increased despite an attempted law enforcement crackdown. In February of last year, the US Justice Department indicted three North Koreans in absentia, accusing them of stealing at least $121 million from cryptocurrency businesses, among other financial crimes.
The increasing attention on Ethereum-based coins, according to Chainalysis' Plante—$272 million in total thefts last year against $161 million in 2020- is due to the surging price of assets in the Ethereum ecosystem well as the embryonic firms that growth has created.
While Chainalysis refuses to name most of the victims of cyber thefts it investigated last year, the research blames North Korean hackers for the theft of $97 million in crypto assets from the Japanese exchange Liquid.com in August, including $45 million in Ethereum tokens. Based on malware samples, hacking infrastructure, and tracing stolen money into clusters of blockchain addresses it has identified as controlled by North Korean hackers, Chainalysis claims it has linked all seven 2021 cryptocurrency breaches to North Korea.
According to Chainalysis, Lazarus carried out the thefts, a loose collective of hackers commonly suspected of working for the North Korean government.
That's all for this week's edition of Overbit Insights - thanks so much for reading, and take care until next time.