Bitcoin, U.S. tech stocks are the biggest bubbles, a Deutsche Bank survey says

In this picture, a visual representation of Bitcoin digital cryptocurrency (BTC) is organized on a hard drive circuit board.

Yuriko Nakao | Getty Images

Bitcoin and US tech stocks are considered by investors as the biggest bubbles in the market right now, according to a Deutsche Bank survey released Tuesday.

The survey, based on responses from 627 market professionals between January 13-15, found that the overwhelming majority of investors (89%) believe that certain financial markets are in bubble territory.

Of those bubbles, bitcoin and US technology shares are at the top of the list. Bitcoin is considered a more extreme case, with half of the respondents giving the cryptocurrency a score of 10 on a bubble scale of 1-10.

U.S. technology stocks were seen as the next largest bubble, Deutsche Bank said, with an average score of 7.9 out of 10 and 83% of respondents giving it a tech bubble rating of 7 or higher.

Investors also believe that bitcoin and electric car maker Tesla are more likely to fall than rise over the next year.

“When asked specifically about the 12-month fate of Bitcoin and Tesla – a stock emblem of a potential technology bubble – most readers think they are more likely to halve than double from these levels with Tesla being more vulnerable according to readers, “Deutsche Says Bank.

Bitcoin has been on a wild ride for the past few months. The world’s largest cryptocurrency rose by market value to a record high of nearly $ 42,000 two weeks ago before slipping sharply. It’s up more than 800% from March 2020 lows, when the cryptocurrency spread on the back of concerns about the coronavirus pandemic.

Bulls say the digital coin has been boiled by growing interest from institutional buyers, as well as the perception that bitcoin is a safe, unattached homepage asset similar to gold. Skeptics, on the other hand, say bitcoin is a speculative asset and a market bubble that is likely to burst one day.

Tesla, meanwhile, saw a huge climb in its share price in 2020 that extended into the new year and crowned its CEO Elon Musk, the world’s richest person. The stock is up over 700% from where it was trading 12 months ago.

And while investors might think that bitcoin, Tesla and other US tech stocks are in bubble territory, it’s unclear exactly what might “pop” those bubbles.

“Easy financial situations” that support bubbles are likely to remain, with 71% of respondents telling Deutsche Bank that they don’t think the Federal Reserve will tighten policy by the end of 2021. But a quarter of investors whose economic growth or markets might force their hand.

More investors say that the introduction of coronavirus vaccines is lower than expectations (41%) than those who said it has been better than expected (22%). Just over half of respondents said they saw life return to normal by the end of the year.