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

The latest survey of global fund managers published by BofA Securities showed that buying Bitcoin is considered the most “crowded trade”. 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 dethroning” Long tech “” crowdfunding “option for the first time since October 2019,” said the survey report .

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 for corporations would hold Bitcoin for business purposes, demand would increase and volatility, the opposite is true when institutions receive exposure for speculative purposes. Empirical evidence from others. asset classes suggest that increased institutional investor participation may increase volatility due to their more opportunistic investment approach, “said Michael Bolliger, chief executive officer investment, emerging global markets, 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. For example, according to JPMorgan Chase & Co, Bitcoin has the potential to reach $ 146,000 in the long run as it competes with gold as an asset class.

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