Bitcoin the biggest bubble in the markets?

The results of two surveys conducted among global investment fund managers have been published in recent days. According to Reuters, institutional investors are increasingly concerned about price bubbles on many asset classes due to ultra-low interest rates and capital being pushed towards more risky assets - including cryptocurrencies and stocks of technology companies listed on the US stock exchange.

According to nearly 90 percent of respondents in the Deutsche Bank monthly survey, many price bubbles have already been inflated, and the most extreme is visible in bitcoinie. On a scale of 1 to 10, with 10 being the largest price bubble, almost half of DB respondents gave a score of 10. When asked about the further fate of Bitcoin or Tesla's share prices in the next 12 months (Elon Musk's shares went up 750% last year ) most respondents replied that it is more likely that BTC and Tesla values ​​will halve by this date than they will double.

A similar survey by the Bank of America, the Global Fund Manager Survey, found that buying bitcoins replaced tech stocks in the ranking on the so-called the most crowded trade (most crowded trade). Thus, long positions in tech stocks in the BofA survey dropped to second place for the first time since October 2019. This is no mean feat for BTC, which has become an asset considered by Wall Street investors.

What's next for inflation and economic growth?

Investors surveyed were reluctant to see global growth prospects, with the percentage of fund managers in the BofA survey who said the global economy was in the early phase of the cycle, unlike a recession, is at its highest in 11 years, according to information released by the agency Reuters.

Record level of 92 percent. of respondents expected higher global inflation over the next year, although a Deutsche Bank poll also found that 71 percent. expects that Federal Reserve The United States will resist the temptation to start removing the stimulus that has helped markets become more active.

In the BofA study, the biggest potential threats to the markets were problems with the introduction of vaccines (30%), the limitation of asset purchases by the Fed (29%) and the bursting of the Wall Street bubble (18%).

Low rates, greater risk

It seems, however, that a worldwide policy of zero interest rates may force investors to take more risks and participate in asset price bubbles. According to BofA, a record 19 percent. investors - who collectively manage assets worth more than $ 500 billion - are now taking more than usual risk in their investment portfolios. So, until central banks start normalizing monetary policy, risky assets may continue to do well and bubbles may continue to grow.