The view that Bitcoin is a hallmark of speculative abundance and froth remains strong even after last month’s 35% plunge.
About 80% of the Bank of America Corp. fund managers surveyed described the market as a bubble, up from 75% in May. The survey, which captures the opinion of 207 investors with assets of $ 645 billion, says “Long Bitcoin” is the second most trafficked trade after commodities.
The results indicate a skepticism on the part of some professional managers as to whether crypto is a viable asset class given its extreme volatility and regulatory uncertainty. Bubble fears are nothing new to cryptocurrencies, and many investors have expressed doubts about the wisdom of wading into an asset that has no fundamental foundation.
Even though prices have fallen, investment banks are still betting on the emerging asset class.
Goldman Sachs Group Inc. announced it will introduce Ethereum-linked derivatives for customers, and Cowen Inc. plans to offer “institutional grade” custody services for cryptocurrencies.
ALSO READ: Dollar Slips in subdued trading as Fed session looms; Bitcoin exceeds $ 40,000
Prices also got a boost this week from veteran hedge fund manager Paul Tudor Jones, who reiterated his view that Bitcoin is a good inflation hedge.
“I like Bitcoin as a portfolio diversifier,” said Tudor Jones of Tudor Investment Corp. in an interview with CNBC. “Everyone asks me what should I do with my Bitcoin? The only thing I know for sure, I want 5% in gold, 5% in Bitcoin, 5% in cash, 5% in raw materials. “
Other highlights of the survey, which took place June 4-10, include:
- 72% of investors say inflation is temporary
- 63% expect the Federal Reserve to signal a throttle in August-September
- Inflation and bond market taper tantrums are tied for top tail risk
- Allocation in bonds to three-year lows (net -69%), while stocks climb back to highs of 2021 (61%)
- 57% of investors say any stock market correction is likely to be less than 10% over the next six months
- Managers prefer a mix of value and tech stocks as assets with the best performance over the next four years
- The allocation to Eurozone equities was increased to a net overweight of 41%, the highest since January 2018
- Allocation to US equities remained 6% overweight
- The UK equities exposure increased to 4% overweight, its highest level since March 2014
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