Bitcoin beats tech as most popular buy
High-value cryptocurrency dethrones US tech stocks as the most popular asset to buy for fund managers.
Two new surveys have revealed a growing demand for Bitcoin as an investment asset. Bitcoin is now experiencing the largest inflow of capital since its debut in 2009.
According to a Bank of America (BofA) survey, released on January 19, 2021, fund managers see Bitcoin buying as the most crowded trade, with 36 per cent of respondents identifying a long bet on Bitcoin as the most popular position.
The same survey ranked tech stock purchases as the second most crowded trade behind Bitcoin buying, the first time that tech has failed to claim the top spot since October 2019.
The high demand for Bitcoin as an investment asset explains the recent upward trend in the cryptocurrency. The price of the leading cryptocurrency by market value has risen by more than 230 per cent in the past three months, hitting record highs when Bitcoin crossed the $41,900 barrier on January 8, 2020.
Meanwhile, betting against the US dollar (selling dollars) was the third most common type of investment.
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The price of the dollar has started rising in recent days. The US Dollar Index indicates that the dollar is currently at 90.50, up 1.4 per cent from a multiyear low of 89.21 seen on January 6, 2020.
Bank of America expects that the global inflation rate will rise by 92 per cent over the next year, and also clarified that 19 per cent of investors – who collectively own assets worth more than $500bn (£366bn, €413bn) – are currently exposed to greater than usual risks in their portfolios.
In a separate survey of money managers conducted by Deutsche Bank, almost half of all respondents described Bitcoin as being at the very top end of the “bubble scale”; and more than half predicted that the price of Bitcoin was more likely to halve that double before the end of this year.