Bitcoin is now considered the most crowded investment in the world.
According to a research assessment put out by a Bank of America Merrill Lynch Fund Managers survey, the sentiment surrounding Bitcoin is at extreme levels, in fact it is at more extreme levels then any other investment in the world.
Kinda hard to believe given the latest news out of China huh?
According to their metrics, Bitcoin recently passed both long the Nasdaq stock index and shorting the US dollar as previous overly crowded trades.
How was the survey conducted?
The Bank of America Merrill survey is considered one of the best by Wall Street and one of the most followed.
The survey took place last week and ended Thursday.
It surveyed over 200 Fund Managers that had at least $600 Billion under management.
Basically, the goal of the survey is to talk to the who's who of global finance and get their opinion.
Bitcoin got 26% of the votes for the most crowded, while long the Nasdaq and shorting the dollar got 22% and 21% of the votes respectively.
Does this mean that Bitcoin is going to immediately tank?
No!
Shorting the US dollar has been one of the most overly crowded trades for a while now and has had strong returns over the last year.
Same with the Nasdaq.
The implications are that any time you get too many people on one side of a trade, it doesn't take much to disrupt the apple cart and get people running for the hills as prices reverse, often dramatically.
That and also when a trade becomes overly crowded it often reverses simply because there is no one left to buy.
My take away:
These guys may be the brightest of the bright, but they don't really understand the implications behind Bitcoin. Yes the price may correct and that is fine, I will buy more, but we are talking about an entire industry transformation much more akin to the development of the internet than a beanie baby or tulip mania.
This isn't about money flocking to a popular asset, it is more akin to money trying to invest in the internet in the 90's.
Bitcoin is likely to play a major role in this transformation going forward, although there is no guarantee that it will be The Cryptocurrency in the future, it is very likely to be at the table.
For that reason I would't and don't put much stock in this survey. I think the short term sentiment is actually pretty negative around crypto assets right now and though I think it can certainly get worse, I am much more apt to buy right now than sell...
Stay informed my friends.
Sources:
https://www.cnbc.com/2017/09/12/bitcoin-is-the-most-crowded-investment-in-the-world-right-now.html
Image Sources:
http://www.marketwatch.com/story/bitcoin-is-now-the-most-crowded-trade-around-bank-of-america-merrill-lynch-2017-09-12
https://futureoflife.org/2016/12/30/2016-actually-year-hope/
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