Robinhood Traders Experience Forced Selling (That Doesn’t Happen in Crypto)

In cryptocurrency when a coin pumps the market decides what happens next. That is true no matter how many people are short and who is short. Same for dumping. It doesn’t matter who is long or how many people get liquidated. Your position can be liquidated, but a smart contract never gets a phone call telling it to freeze out retail traders and only let the big players play.

We can see now that it is not like that with equities. Many brokers froze trading on GameStop and AMC today due to a buying frenzy that arose out of Reddit’s WallStreetBets community.

It may have been chaos, shorts may have been getting squeezed and causing a panic, but the response of freezing all orders aside from sell orders and brokers selling off client’s holdings was a wake-up call to many.

No asset class is perfect, but crypto is at its core decentralized. There is no bank to tell you no, there is no one to stop a coin from going to zero, there is no one who will stop a short or long squeeze, and there is no one who can sell your coins for you. Now can change a bit when you use derivatives products on centralized crypto exchanges, as technically that entity could step in, but in terms of blockchains and smart contracts, crypto is decentralized.

In short, if you are off-put by centralized finance but not by volatility, just know there is already a system in place waiting for you.