By Yasin Ebrahim
Investing.com – Bitcoin has been in the shadow of the "financial rebellion" in recent days as the short-squeeze trade continues, but this will lead to a wave of new crypto investors, experts say.
Bitcoin ( BitfinexUSD ) was up 6.5% to $34,663, though had been as high as $38,710, widely attributed to a show of support from Tesla (NASDAQ: TSLA ) CEO Elon Musk, who added the hashtag #bitcoin to his twitter bio.
In recent days, bitcoin has been in a period of consolidation as investor focus centered on the Redditor-led squeeze on short-selling hedge funds in stocks such as GameStop (NYSE: GME ), AMC and Blackberry (TSX: BB ).
The showdown between the "regular" investor versus big Wall Street turned ugly earlier this week as several trading platforms including Robinhood restricted trading on the stocks, sparking a sharp selloff.
The feeling of injustice among retailer traders participating in the short-squeeze has not gone unnoticed and will be viewed in history books as an "unintentional start to a financial rebellion," said Nicholas Pelecanos, head of trading at NEM, a technology platform that seeks to be an efficient way to manage assets and data easily and at low cost.
Unlike their more illustrious short-seller adversaries, the new wave of investors are not "colluding in secret to short a business down to 0" but are rather "openly targeting and short squeezing hedge funds," Pelecanos said.
Still, the short squeeze that has captivated global attention and brought in a wave of new investors likely represents a silver lining for bitcoin and other major cryptos.
"With Robinhood halting trading of certain assets like GameStop and Nokia (NYSE: NOK ) and NASDAQ president and CEO Adena Friedman calling for regulations to prevent retail investors from coordinating on social media, the case for cryptocurrencies only grows stronger. I believe we will witness a new wave of investors come over Bitcoin and other major crypto assets as a result of this debacle," Pelecanos added.
Yet the demographics of the traditional bitcoin investor appears to have undergone rapid change over the past year.
Institutional investment in bitcoin has soared, pushing the overall crypto market cap briefly over a $1 trillion, driven by the need for portfolio diversification as a hedge to the ongoing currency debasement sparked by central banks' ultra-loose monetary policy measures.
The progress of the cryptocurrency ecosystem, meanwhile, has led to the introduction of regulatory frameworks and custodial service layers "needed to allow movement of institutionally managed funds to gain exposure to cryptocurrencies as a viable new asset class," said Eric Kapfhammer, COO and head of Polyient Capital.
University endowments – arguably one of the safest hands of the investment world – have entered the crypto fray in search of financial opportunities.
"In the intermediate-term, I see crypto becoming a must-have asset in any institutionally-managed portfolio, which should end up having a substantial impact on the size and growth of the crypto ecosystem as a whole," Kapfhammer added.
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