Bitcoin is Now the Most Crowded Trade in the World
According to the Lynch Fund Managers Survey from Bank of America, Bitcoin is now being considered as the “most crowded trade.”
In other words, this title implies that the number of investors active in the trade is so large that the market could lead to a massive reversal in the future.
Investors also conform to this statement, as they too feel that Bitcoin trading is likely to cripple up owing to the increasingly large numbers of traders.
The survey was conducted during the period of September 1-7, and it is also held as one of the most respected and authentic surveys of Wall Street.
It has been reported that about 200 fund managers have participated in this survey. Almost all these managers came with $629 billion under management.
The authenticity and the popularity of this survey make it one of the most essential indicators suggesting where exactly the money is likely to flow.
While Wall Street veterans seem to hold conflicting opinions about the prospects of the digital currency, most fund managers feel that a large chunk of individuals is optimistic about Bitcoin.
There was a surge of 330 percent in the price of Bitcoin this year. This very figure suggests that more and more people are developing an interest for this cryptocurrency.
While some are choosing alternative assets owing to this massive popularity, others fear this to be a mere speculative bubble.
However, after the interview, it was revealed that about 26 percent of the surveyed fund managers are of the opinion that, currently, Bitcoin is indeed one of the most crowded investments.
In this survey, Bitcoin replaced both the short dollar and the Nasdaq trade in being the most crowded trade of the year.
The currency got a vote of whopping 26 percent, thereby coming ahead of Nasdaq which was stuck at 22 percent and the Greenback which was also somewhere around 21 percent.
The two mentioned “crowded trades” have managed to fare pretty well this year.
While Nasdaq had a surge of almost 20 percent, the short dollar tumbled up to 10 percent thereby ousting its entire set of global competitors.
To add to the fluctuations and predictions about the trading of Bitcoins, most of the fund managers are now moving away from United States-based stocks.
The complete and collective allocation to these equities (on a domestic level) have fallen about 28 percent underweight.
This is indeed an alarming figure, as this happens to be the highest level of fall since the year 2007 (November), soon after the trading market hit an unbelievable high.
Most of the investors have also started worrying about the growth on a global level.
In fact, currently, only 25 percent of the traders expect a stronger global figure in the next couple of months, from the 62 percent of traders who were more optimistic in the first couple of months of 2017.
Bitcoin has indeed come up with great returns in the year 2017.
The price of the cryptocurrency rose from a figure of around $950 at the beginning of the year to about $5,000 at its peak point.
However, right now it has fallen to around $4,000.
There are many pertinent causes of this downfall, one of which is Segwit, a medium developed in order to reduce the high congestion in the network of this cryptocurrency.
Other reasons might be the sudden friendly regulations of Bitcoin in Asian countries, the various institutional traders who consider Bitcoin to be a great alternative asset, and so on.
There is, however, a fear that the government might act against Bitcoin.
The issue is even graver in China, and this is exactly why the price significantly plummeted this very month.
Bitcoin traders are of the opinion that there is some kind of jinx in the trajectory of Bitcoin’s path, and this will soon take a better shape and gain greater value with more adoption.
So although Bitcoin is indeed a crowded investment, it does not indicate in any way that the asset is going to be over anytime soon.
Nasdaq serves as the biggest example as it fared relatively well this year, despite being one of the most crowded trades in 2016.