One of the most iconic moments of the past week was when Keith Gill, otherwise known as Reddit trader DeepF**kingValue, testified in front of the House Financial Services Committee: “I am not a cat.” All who enjoyed the video of the meeting in which a frustrated lawyer struggled with Zoom settings (who among us hasn’t experienced Zoom awkwardness?) immediately knew what he was referring to, and some of us may or may not have spluttered coffee all over our keyboard.
It wasn’t so much the power of memes that made his remark feel important, nor was it just the humor that made us sit up. It was more the deadpan delivery, staring at the screen, addressing some of the most powerful people in the world. To me, it synthesized a loud shift in attitudes toward authority. With that throwaway remark, Mr. Gill demonstrated loyalty to his tribe rather than to the establishment, a sentiment we see playing out not only across social media but also in classrooms, culture, startups and even in the intimidating world of finance.
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The surge in value of “anti-establishment” bitcoin, which broke $1 trillion this week, as well as of meme coins such as Dogecoin, are to a large extent an extension of this. The lack of trust in the establishment’s judgement, and the visible weakening of its influence, make alternatives more viable.
This goes beyond individual crypto assets. The congressional hearings highlighted a growing awareness of structural risks in our capital markets. This, combined with recent industry trends, points to strong potential growth in an area of digital assets we have not yet talked much about in this column: decentralized finance, or “DeFi.”
The concept is about so much more than high investment returns, although there are potentially plenty of those to be had for those willing to take on high risk. It’s about the emergence of a new type of financial market, not created with professional investors in mind, but which will end up benefiting from their interest. This week, that got a strong boost.
Under the hood
The GameStop drama awakened a greater interest in financial market plumbing, something that very few had bothered to care about before. When we see what looks like institutions trampling on the retail investor, we have questions. Few congressional hearings have been as eagerly followed as this one, in the hopes of getting answers and of seeing the beginning of change.
This is happening at the same time as an explosion of interest and development in DeFi…