'Long Tech' Retakes Most-Crowded Trade Crown from Bitcoin: Bank of America Survey
A bullish bet on technology stocks, or "long tech," has reclaimed the title of most-crowded trade in the financial markets, according to Bank of America's (BofA) February survey of fund managers.
According to a Reuters report Tuesday, the move pushed "long bitcoin" back into the number two slot, having been most crowded trade in January.
Bitcoin saw a surge in capital inflow last month, with prices reaching then-record highs above $40,000 on Jan. 8 – a 300% gain from early October lows near $10,000. Before that, betting in favor of technology stocks was the most preferred trade throughout the final quarter of 2020.
While the top cryptocurrency has printed fresh lifetime highs near $50,000 in February on a wave of institutional adoption, capital inflows have cooled.
Reflecting a generally conservative view, only 5% of global fund managers expect bitcoin to outperform other asset classes in 2021 versus nearly 60% for emerging market equities.
Bank of America survey
Bitcoin, however, is expected to outshine gold. The top cryptocurrency rose 300% in 2020, outperforming every major asset class, and has gained 70% this year.
So far this year, bitcoin is up 68%, while S&P500 stocks are up 4.7% and gold is down 3.8%.
Crypto traders expect corporate demand for bitcoin to pick up in the wake of Tesla's recent decision to put $1.5 billion into the cryptocurrency, leading to a more substantial price rally.
The BofA research shows betting against the U.S. dollar ("short dollar") is still the third most-crowded trade. Meanwhile, cash levels in investment portfolios have plunged to 3.8% – the lowest level since 2013. According to the fund manager survey, when cash levels drop below the 4% mark, it indicates over-optimism and triggers a contrarian sell signal.
DISCLOSURE
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
