Bitcoin is a bubble for majority fund managers globally: Bank of America survey

by Joseph K. Clark

When filing this report, Bitcoin was trading at a little over the $ 63,000 mark. (File Photo). While Bitcoin prices jumped to a fresh high of above $64,000 on Wednesday as Coinbase’s direct listing on Nasdaq fuelled investors’ interest in the cryptocurrency, most fund managers believed Bitcoin to be simply a bubble. That’s at least according to the April 2021 Global Fund Manager Survey by Bank of America. The monthly survey, which canvasses the global thoughts of around 200 institutional, mutual, and hedge fund managers, showed that 74 percent of respondents believed Bitcoin to be a bubble. At the same time, only 16 percent disagreed with the notion. Bitcoin was trading at a little over the $ 63,000 mark when filing this report, as per data from Coindesk.

A long position refers to buying an asset hoping its value will increase over time. The survey also noted that a long post on bitcoin was seen to be the second most crowded trade by 27 percent of respondents after technology stocks (31 percent) but ahead of environmental, social, and corporate governance (ESG) (17 percent), cyclical stocks (14 percent), and US treasuries (8 percent). Moreover, around 10 percent of respondents expected Bitcoin outperforming other assets in 2021.


Also, read Coinbase on Nasdaq: What the landmark listing means for Indian crypto startups, investors, and ecosystems.

Bitcoin has exploded over the past 12 months with an over 800 percent jump in price from $6,718 as of April 16, 2020, amid increased interest from institutions and large investors such as Tesla, PayPal, Visa, Square, and many more. According to a recent Bloomberg study on the crypto outlook for 2021, Bitcoin may climb sixfold up to $400,000 in 2021, similar to the bull run of 2013 and 2017. “Our graphic depicts Bitcoin on similar ground as the roughly 55x gain in 2013 and 15x in 2017. To reach price extremes akin to those years in 2021, the crypto would approach $400,000, based on the regression since 2011 high,” the study noted.

The total market cap of all cryptocurrencies had topped $2 trillion for the first time earlier this month, with Bitcoin dominating 54.1 percent of it at a $1.09 trillion market cap, according to the data from the crypto tracker CoinGecko. There are 6,704 coins with a combined market cap of almost $2.3 trillion, with 50.9 percent dominance by Bitcoin and 12.4 percent by Bitcoin’s closest rival, Ethereum. The $1 trillion addition to the overall market cap occurred three months from the $1 trillion market cap as of January 7, 2021.

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