Long Bitcoin Replaces US Tech Stocks as the Most Crowded Trade in January: BofA Survey

The long position in Bitcoin has now overtaken “long tech” as the most crowded trade in January, as per the trade fund managers, revealed the Bank of America's monthly and manager survey on Tuesday.

This is the first time since October that a long position on technology stocks has been replaced on the top spot as investors said a long position on Bitcoin was the most crowded. The short US dollar is the third most crowded one.

A record 19% of investors also said that they are taking more risk than normal. The fund managers surveyed manages a total of more than $500 bln in assets.

In January, the price of Bitcoin hit a new all-time high at $42,000, after a 50% incline, and ever since the pullback earlier last week, it has taken to ranging between $30k and $40k.

Since the March sell-off, the Bitcoin price has gained more than 10x amidst the money printing by central banks around the world and interest rates getting pushed down to zero and sub-zero levels.

All of the fiscal stimulus is why despite the greenback gaining strength above 90 from its multi-year lows is not making people bullish about the US dollar Index.

In a similar survey by Deutsche Bank, investors said Bitcoin was in a bubble, with 56% of the participants expecting the leading digital to lose half of its value in the next 12 months. The respondents also put US tech stocks at the top of this bubble list.

At the same time, a record 92% of BofA investors expected higher inflation over the next year.

A record 83% of investors surveyed by BofA also expect a steeper yield curve — higher than what was expected after the 2016 US election, the 2013 US Federal Reserve’s “Taper Tantrum,” or after the 2008 Lehman Brothers collapse.

Investors are also bullish on global growth, a growing number of fund managers surveyed saying the global economy is in an early-cycle phase. The tail risks to the economy were problems with the vaccine rollout (30%), the Fed easing its asset purchases (29%), and a Wall Street bubble (18%).

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