Who controls memes controls the universe

Crowds are easily exploited by their leaders, theorised 19th-century psychologist Gustave Le Bon, whose mantra for guiding the masses was: “Assertion, repetition, contagion.” Today’s financial markets are much the same — but crowd control has its challenges.
Easily-shared memes, GIFs and tweets have fuelled a volatile stampede into corners of the stock market, metals and cryptocurrencies, with tech billionaires such as Elon Musk or Chamath Palihapitiya goading them on. Screenshots of brokerage balances are flaunted like war wounds. Slogans like “Crash JPMorgan, buy Silver” are shared at speed before there’s time to point out their inconsistencies. Memes of Bart Simpson writing “I will never sell AMC” serve as a warning to those who chicken out and fail to “hold the line.” These are images that tell “10,000 words,” said Musk, telling audio hangout app Clubhouse: “Who controls the memes, controls the universe.” Regulators will no doubt draw their own conclusions as they begin to poke around for potential market manipulation, and warn of a hard landing for some unlucky day traders. But crowds need more than memes to stay united.
Already, after a week of Musk pushing markets up with a simple hit of the “tweet” button, we’re starting to see the limits of the memestock pop. Bitcoin, whichsurged 14% last week when Musk added the cryptocurrency to his Twitter bio, is down about 3% in three days, even after a second name-check. Dogecoin, a Shiba Inu-themed digital coin that started as a joke, tanked 46% after a fivefold jump in its price driven by a similar Musk shout-out. And shares of Polish computer games maker CD Projekt SA have fallen back to Earth after the billionaire praised its Cyberpunk 2077 game as “great” — after all his girlfriend Grimes voices one of the characters — minting another billionaire in the process.
This isn’t just about the Tesla Inc. founder’s own idiosyncratic picks — Bitcoin’s wastefulness doesn’t exactly match with electric cars — but about the intersection with leveraged day traders. The two most emblematic stocks championed by Redditors as a way to crush hedge funds, GameStop Corp and AMC Entertainment Holdings, have taken hits this week.
No matter how big the crowd, the power of memes has limits when the self-interest of a big payoff is involved. Florence Ruessmann, a behavioural finance specialist at ULB in Brussels, reckons the early instigators of the memestock trades have probably pocketed their gains by now. She likens it to the waves of adoption of a new technology: There’s a difference between first movers with the biggest risk appetite and the latecomers who are simply afraid of missing out. The infectious, lizard-brain “fight or flight” memes can’t hide that this isn’t one homogenous crowd but a multitude of sub-groups.
Even though Musk has the follower count to match his wealth and ego, as does Palihapitiya, sometimes messages can fall on deaf ears. Rich tech elites like to play to the gallery by bashing Wall Street and the boomer establishment, but a good meme won’t always paper over hypocrisy or cynicism.

—Bloomberg