The vast majority of fund managers think Bitcoin is in a bubble: Bank of America

A survey by the Bank of America has revealed that a majority of fund managers believe that Bitcoin is in a bubble.
Bitcoin witnessed a 35 percent price crash last month with FUD primarily driving the fall.

A new survey by the Bank of America has revealed that around 81 percent of fund managers believe that Bitcoin is in a bubble. Over 200 fund managers with over $650 billion in assets under management were surveyed for this report. Four in every five said that Bitcoin is currently overpriced. The new report further revealed that Bitcoin is no longer the “most crowded trade.” Long commodities are the most crowded in Wallstreet with Bitcoin now coming second.

Commodities are raw materials such as oil, gold, silver and lumber. These are being supported by a growing fear of inflation despite economies reopening. Commodities are prefered hedges against inflation. Bitcoin plays the same role but is unfavoured for its volatility. In May, the digital asset lost roughly 35 percent and has since stagnated.

Market leaders have long been calling for fund managers to allocate a share of their portfolio in Bitcoin. Uncollerated with any other asset, it offers the best hedge.

Despite the near 50 percent drop from the ATH, fund managers still believe that the digital asset is in a bubble. Curiously, most Bitcoin advocates say that the recent drop is a short term correction and that prices will not only get back to the current ATH of $65,000 but will surpass this to reach as high as $100,000 by the end of the year.

Bitcoin fundamentals remain strong

The Wallstreet scepticism could be an indicator that institutions are backing off from buying more Bitcoin. In the first quarter of the year, there was strong demand for Bitcoin from institutions. At the time, Bitcoin was soaring, triggering FOMO across the market. In recent weeks, the digital asset has suffered a string of negative developments. Bitcoin has come under heavy regulatory scrutiny across the world which has deterred institutional investors. Additionally, there has been huge concern and contrast over Bitcoin’s energy consumption.

However, not all institutions are turning away from Bitcoin. Microstrategy as we have reported has not only recently raised $500 million in bond notes to buy Bitcoin, but is also planning to raise $1 billion in share sales which will also be used to buy more Bitcoin. Microstrategy is one of a number of listed companies that hold Bitcoin.

Read Also: MicroStrategy has plans to acquire more Bitcoin as Michael Saylor proves to be Bitcoin’s biggest bull

This year, the number of listed companies, trusts and ETPs holding Bitcoin has drastically increased. According to one report, over $6.5 billion or 1 percent of the Bitcoin supply is held by 19 publicly-listed companies. In total, listed companies, trusts and ETPs now control almost 7% of the Bitcoin supply.

The recent price drop has deterred new investment but with market leaders still optimistic and fundamentals still strong, if Bitcoin stages a comeback, institutions are set to continue backing the new class asset.

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