Bitcoin hit a record high earlier in January
Bitcoin was reported as the most crowded trade on the market for the first time in four years, replacing tech stocks as the trade which fund managers see as the most popular, according to the latest Global Fund Manager Survey from Bank of America.
The survey showed that 36% of respondents said long bitcoin was the most crowded trade, knocking technology off its perch for the first time since 2019. A short position on the dollar was seen as the third most crowded.
Bitcoin’s value is on another rollercoaster ride, soaring to a new record high of $40,000 for the first time earlier this month and is currently hovering around the $36,000 mark.
Wealth managers split on bitcoin amid growing adoption and wild price swings
Institutional investors are showing a growing interest in bitcoin, with proponents of the cryptocurrency saying it offers a hedge against inflation and a weak US dollar, similar to gold.
The survey of 217 panellists with $596bn in assets under management revealed that investors most concerned about vaccine rollout problems (39%), the Fed tapering its asset purchases (29%) and the bubble on Wall Street bursting (18%).
Investor optimism on stocks is at its highest level since January 2018, with a net asset allocation of 53% saying they were overweight. Meanwhile, 41% of investors expect small caps will outperform large caps in the next 12 months.
Respondents said they were positioned for cyclical recovery in January by increasing allocation to energy, materials, banks, small cap, emerging markets and rotating out of healthcare, tech and US.
Ruffer IC replaces gold with bitcoin as ‘potent insurance policy’
A majority (34%) of those surveyed expect the Biden administration to increase taxes to help pay for the coronavirus pandemic and finance his ambitious plans for infrastructure.
Investors were also bullish on the outlook of growth, with 73% – the highest in 11 years – saying the global economy was in its early-cycle phase rather than recession.
A record 92% expect global inflation to rise over the next year as consumer demand rises once lockdown restrictions ease and the vaccine rollout allows economies get back on track.
The survey also showed that cash levels were down to 3.9%, their lowest level since March 2013.
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