Meet the bubble everybody wants to park their funds in

Source :Sify
Author :Finance Desk
Last Updated: Wed, Jun 16th, 2021, 05:50:29hrs
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Bitcoin-1200

Bitcoin renowned to make volatile swings at the mere drop of a tweet seems has been perceived as a bubble. That, according to findings from a recent survey.

The June Fund Managers Survey from the Bank of America, BoFA Global Fund Manager Survey, found ""long bitcoin"" as the second most overcrowded trade in markets. Long bitcoin is a practice of holding bitcoin for a long term.

The study also found nearly 80 percent respondents referring to Bitcoin as a Bubble. The study does not find a consensus among fund managers on when and whether the bubble may burst.

The observation on Cryptocurrencies is in stark contrast to market behavior - Goldman Sachs Inc planning to roll out derivatives tied with Ethereum for clients, the recent Coinbase IPO on the Nasdaq that exceeded expectations, the rousing interest in Doge and then those tweets.

And then, there's more to the survey than just that.

Although Bitcoin with its market-cap and astronomical price appears overcrowded; it is not the King of overcrowded trades.

The crown of overcrowded assets is held by Long Commodities even as a favorable number of respondents believe in investing in commodities.

Long Commodities replaces allocation to technology stocks (analysis in May) as the most over-crowded investment bet.

Fund managers also seem to be favoring stocks with the study finding allocation to bonds crashing to a 3 year low.

For its latest study, the BoFA report captured opinions from 207 fund managers with $645 billion in assets.

Among other notable observations, the survey finds:

  1. Investors are bullishly positioned for permanent growth, transitory inflation & peaceful Fed taper via longs in commodities, cyclicals & financials.  63% expect Fed to signal taper Aug/Sept. 
  2. 72% believe inflation is transitory, 23% think inflation is permanent. 
  3. FMS shows growth & EPS expectations have peaked but investors say investment cycle transitioning from early to mid-cycle (68% don't expect recession until 2024 at earliest).   
  4. Any equity market correction in the next six months likely to be less than 10%, according to 57% of investors
  5. Allocation to bonds at three-year low (net -69%), while stocks back up to 2021 highs (61%).
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