Bitcoin, the world’s largest cryptocurrency, nabbed a new record price above $63,250 Tuesday morning as Wall Street gears up for pioneering crypto-exchange Coinbase’s public market debut on Wednesday, but Bank of America is warning an overwhelming majority of fund managers around the world think bitcoin is just a bubble—at least according to its monthly survey.
Though it pared back gains by about 10:45 a.m. Eastern, bitcoin’s price has climbed nearly 4% over the past 24 hours, trading at about $62,970 and lifting gains over the past year to a staggering 780%, according to crypto-data website CoinMarketCap.
After a month-long dry spell, bitcoin’s sudden rise helped push the total market capitalization of cryptocurrencies around the world to an all-time high of nearly $2.2 trillion Tuesday morning, as other top tokens like ether, binance coin and Ripple’s XRP jumped 4%, 1% and 23% over the past 24 hours, respectively.
Analysts are pinning the renewed momentum to optimism over Coinbase’s listing on the Nasdaq, which marks another instance of storied financial institutions warming up to the still-nascent industry, while retail traders are hopeful soon-to-be SEC Chairman Gary Gensler, an MIT cryptocurrency professor, could usher in progressive regulatory reform in the space.
Despite the soaring institutional adoption, however, Bank of America released a survey Tuesday morning that shows 74% of fund managers think bitcoin is just a bubble, compared to 16% who think it’s not.
More than three in 10 of the 200 respondents, who collectively oversee $533 billion in assets, said bitcoin was the second-most crowded trade in the market, behind only tech stocks, which soared nearly 100% during the pandemic but have since underperformed broad-market indexes.
“Slowing momentum in bitcoin… is likely a reflection of a growing supply of available investing alternatives for digital assets, rather than concerns over their long-term prospects,” Julian Emanuel, a chief strategist at capital markets firm BTIG, said Monday. “That said, the Wednesday IPO of a prominent crypto exchange will offer another high-profile investment option. How bitcoin reacts in the week ahead will set the tone for weeks to come.”
22% of Americans, including about 35% of Millennials and 30% of Gen Zers, own some form of cryptocurrency, according to a survey released Monday by Magnify Money, a LendingTree subsidiary. “Crypto is very volatile,” LendingTree Chief Economist Tendayi Kapfidze says of the findings. “The risk parameters aren’t well understood. It’s more of a speculative instrument than an investment.”
“The crypto markets are very young and we expect many more companies to compete for the profits Coinbase enjoys today,” says David Trainer, the CEO of investment research firm New Constructs, calling Coinbase’s expected valuation of $100 billion “ridiculously high.” As the cryptocurrency market matures, Trainer expects Coinbase’s transaction margins will “drop precipitously” as competitors cut their fees to increase market share, as happened with online brokerages like Robinhood eating up market share from established brokers like Charles Schwab and Fidelity.
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