By James Giancotti, CEO and Co-founder of Oddup, a premier international provider of data-driven insights for the startup and cryptocurrency ecosystems.

Even though the darkest days of the pandemic were raging in January 2021, all anybody could talk about was what an army of keyboard traders on Reddit were doing to major finance short sellers and Gamestop’s stock price, which had risen from $17 just after the new year to nearly $350 on January 27 (a 2000% increase).

Dubbed the “short squeeze,” an army of day traders on Reddit’s WallStreetBets (WSB) subreddit led a coordinated attack on short selling hedge funds that was on par with a hostile takeover, or the finance industry version of a coup d’etat. In the time since the short squeeze, nearly one year, the darlings of WSB, from GameStop to AMC to Nokia, have fallen and (mostly) risen, but the more permanent legacy of that movement was to demonstrate the new way financial information was being gathered, shared and weaponized in a post-social media, post-Bitcoin, soon-to-be-post-pandemic world.

If you can’t beat ‘em, join em: WSB, social intelligence and “finfluencers”

While the impact of something like WSB and what that group was able to accomplish with the short squeeze shouldn’t be underestimated, the fundamentals of financial diligence, research and investing haven’t changed. Markers like a company’s quarterly reports, P/E debt and cash on hand still speak as well as anything else to that company’s long-term prospects and viability, but social media cannot be ignored in its current role as its own mover of markets, shifting the fortunes of companies or whole industries, sometimes in seconds.

Nevertheless, when it comes to the growing influence of social media on not just society but markets, with apologies to Arthur Miller, attention must be paid. Social media has its own energy that carries massive repercussions for gauging not only the perceived value of an investment during a moment in time, but now its overall value, period.

If 2021 was when the ragtag band of rebels offered “a new hope” to the emerging class of mostly millennial investors interested in crypto, memes and “stonks,” then perhaps 2022 will be something like “the empire strikes back,” but in a way where the institutional finance class finds a way to join these “always online” investors instead of beating them. After all, nobody wants to be known as the next Melvin Capital, which lost billions of dollars and had to be rescued by other hedge funds. The online “lunatic fringe” of investment and trading must be respected, and institutional finance should avoid putting a target on its own back.

One way for traditional finance to become a greater and more included part of that online conversation is to leverage its outsized resource access to start analyzing what and where financial intelligence is being publicly shared on social media. It can then better steer those conversations to their own goals and interests without seeming manipulative.

It seems that is already happening. The role of social media financial influencer is now actually a thing that exists. Social networks are just one more portal into financial intelligence, no less or more important than financial diligence tools like the Bloomberg Terminal. As with anything in this new wild west of online financial discussion, companies must be careful about not engaging with any personalities that might have them run afoul of the regulatory bodies in their jurisdiction though.

New investors and new asset classes

One more reason for institutional finance to keep its finger on the pulse of the social media conversation is given how less risk-averse and more “volatile” the millennial investor class has become, a large number of investment dollars could swing substantially in a very short amount of time. It’s not just a matter of a subreddit swinging its crowdsourced support from Gamestop to AMC from one week to the next either. The younger, millennial investor is swinging their disposable income from one asset class to another week-to-week and month-to-month in a bid to maximize profit and yield.

This might best be exemplified in millennial interest and fluency in crypto as an investment. According to data from The Motley Fool, 40% of stock investors aged 18 to 40 own cryptocurrency. That number goes up even more when measuring the younger investors of Gen Z, so as those Gen Z investors start to make up the majority throughout the decade, crypto will only seem that much more like an acceptable and even somewhat stable option. Crypto is increasingly becoming a more diverse sector, with all kinds of risk levels, allowing younger investors to park their money in a vehicle without having to deal with the overhead that comes with traditional finance and brokerages.

The gap between stock and crypto ownership is closing among millennial investors, and the low yield of traditional savings accounts will continue to be unattractive, especially if inflation continues, as it is expected to through the first half of 2022.  There could even be a time when traditional stocks and bonds are perceived as more trouble than they are worth, especially in inflationary times like the current one, where yield nearly matches the rate of inflation, totally negating its value even as a stable option.  As the investor class gets younger, many will trade the stability of these essentially net-zero yields for something with a slightly higher risk profile, but with the potential for much higher yield.

Like any other business, institutional finance cannot get locked into a model that was true ten or five years ago, or even yesterday, but simply isn’t true today. Those who take 2021’s lessons to heart will be the most prepared for 2022 and the rest of the coming decade.