In this photo illustration, a visual representation of digital cryptocurrency Bitcoin (BTC) is arranged on a hard drive circuit board.
Yuriko Nakao | Getty Images
According to a Deutsche Bank survey released Tuesday, Bitcoin and US technology stocks are seen by investors as the biggest bubbles in the market.
The survey, which is based on responses from 627 market professionals between January 13-15, found that the vast majority of investors (89%) think some financial markets are in bubble territory.
Of those bubbles, bitcoin and US tech stocks top the list. Bitcoin is seen as a more extreme case, with half of the respondents giving the cryptocurrency a score of 10 on a scale of 1-10.
US technology stocks were seen as the second-largest bubble, Deutsche Bank said, averaging 7.9 out of 10 and 83% of respondents giving it a tech bubble rating of 7 or higher.
Investors also think that bitcoin and electric car maker Tesla will fall rather than rise next year.
“When asked specifically about the 12-month fate of Bitcoin and Tesla – a stock that symbolizes a potential tech bubble – a majority of readers think they will halve rather than double, with Tesla more vulnerable according to readers,” Deutsche Bank said .
Bitcoin has been on a wild ride in recent months. The world’s largest cryptocurrency by market value rose to a record high of nearly $ 42,000 just two weeks ago, before declining sharply. It is up more than 800% from its March 2020 low, when the cryptocurrency cratered due to concerns about the coronavirus pandemic.
Bulls say the digital currency is bolstered by the increased interest from institutional buyers, as well as the perception that bitcoin is an uncorrelated safe haven, similar to gold. Skeptics, on the other hand, say bitcoin is a speculative asset and a market bubble is likely to burst one day.
Tesla, meanwhile, also saw a massive surge in its stock price in 2020, stretching into the new year, crowning its CEO Elon Musk as the richest person in the world. The stock is up more than 700% from where it traded 12 months ago.
And while investors may think bitcoin, Tesla and other US technology stocks are in bubble territory, it’s not clear exactly what could “pop” those bubbles.
“Easy monetary situations” that support bubbles are likely to persist, with 71% of respondents telling Deutsche Bank that they do not believe the Federal Reserve will tighten policy before the end of 2021. But a quarter of investors said economic growth or markets could be forcing. their hand.
More investors say the rollout of coronavirus vaccines falls short of expectations (41%) than those who said it was better than expected (22%). Just over half of the respondents said they saw life back to normal by the end of the year.