The study had the participation of 217 fund managers of the financial institution. Investors have kept their holdings of cash to a minimum.
Bank of America recently conducted a survey indicating that long-term investors prefer to inject capital in Bitcoin (BTC) rather than in US dollars, gold, emerging markets, or corporate bonds. A total of 217 managers that manage around USD 576,000 participated in the study.
To the question “What do you think is currently the busiest trade?”, investors favored long swaps of shares related to the technology world with 52% in the first place. This figure is much lower than the one recorded in September when it was 80%, according to a recent press report.
Short positions for the US dollar are in second place, with around 18%, and long-term investments for Bitcoin are in third place, with about 15%. In the universe of investments, a short position means that traders consider that the price of an asset will fall. In a long position, investors believe that the price of an asset will rise. Investors would thus be betting on the fall of the US dollar and the rise of BTC.
There is higher interest in the pioneering cryptocurrency than in traditional financial products. That says a lot about the restructuring that large-scale investment portfolios would be experiencing.
The survey also highlights that the longs in Bitcoin went from less than 5% to 15% between November and December. Besides, long positions for gold fell from just over 5% in November to less than 5% in December.
Taking into account that investors manage USD 576,000 million, it would be possible to deduce that the respondents’ long-term positions in Bitcoin would be around USD 86,000 million.
According to data from CoinGecko, the total capitalization of Bitcoin is around USD 360 billion. In other words, those who would invest long-term in Bitcoin currently represent more than 20% of the capitalization of Bitcoin.
Economic Reopening after Investors’ Divesting Themselves of Cash
The analysis indicates that investors would be optimistic about the possibility of a rebound in economies after the fall that the COVID-19 pandemic caused. Given this potential situation, fund managers have cut their cash positions to aim them at risky assets, such as Bitcoin and other cryptocurrencies.
“Investor sentiment is bullish as hopes for the vaccine induce a strong ‘buy-at-reopening’ operation (…) Expectations of recovery have also exceeded previous recessions in both speed and magnitude,” said strategists at the financial institution.
The behavior of the markets reveals a significant drop in the US dollar, which currently shows its lowest levels during the last two years. Investors’ cash positions would be around just 4%, a figure not seen since May 2013.
While fund managers have recently divested themselves of cash, the price of Bitcoin has risen to levels not seen since the 2017 bullish run. At that time, the price of the pioneering cryptocurrency climbed to USD 20,000 per unit.
According to the trends that the Bank of America survey shows, Bitcoin is on top of the busiest operations. That is also evident in the billions of US dollars that the corporate world has injected in BTC.
Among the most prominent cases of institutional investment are companies such as MicroStrategy, MassMutual, Stone Ridge Asset Management, Square, and Grayscale.
By Alexander Salazar
