Buying Bitcoin is the most overpriced trade; reminds someone of the 2018 crash

Buying Bitcoin is considered the biggest “crowded trade”, according to the latest global fund managers survey published by BofA Securities. After Bitcoin’s massive rally in recent months, it’s no surprise that this cryptocurrency is rapidly regaining its lost glory. From a low of $ 4,000 in mid-March last year, the world’s first and most famous cryptocurrency price has risen nearly 900%. Currently, Bitcoin is trading at $ 34,750.

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“Bitcoin has long jumped to the top with 36% of fund managers’ survey investors saying it is the most crowded ‘crowdfunding’ ‘Long tech’ for the first time since October 2019,” the survey report said.

Investors who have been tracking Bitcoins in the past would remember that a similar rally in 2017 was followed by a crash. In 2017, Bitcoin increased from the low of about $ 790 to a peak of $ 1,9041 in December. Interestingly, in the December 2017 BofA survey, Bitcoin topped the list of the most crowded trades. In 2018, it crashed 74%.

Even now, many experts have been warning about a bubble building up in Bitcoins, especially given the sharp rise in volatility and increasing institutional participation.

“Most cryptocurrencies are highly volatile and the increase in institutional participation may make things worse. While demand would increase and volatility if corporations held Bitcoin for business purposes, The opposite is true when institutions are exposed to speculative purposes. Empirical evidence of another asset. distributions suggest that increased institutional investor participation may increase volatility due to their more opportunistic investment approach, ”said Michael Bolliger, chief executive officer investment, emerging markets globally, UBS Switzerland AG in a report on 14 January.

Ultimately, time will tell what is true of Bitcoin investors but those in the bullish camp see further upside. Bitcoin has the potential to reach $ 146,000 in the long run as it competes with gold as an asset class, according to JPMorgan Chase & Co.

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