Bitcoin’s institutional adoption has been off the charts in the past year, with Wall Street finally jumping aboard the Bitcoin bandwagon. However, a new report has revealed that only a few believe in its potential, despite the public show of support and heavy investment. The survey showed that one in three investors believe the top cryptocurrency is a bubble.
The Bank of America Fund Manager Survey sought to capture investors’ sentiment at a time when the crypto and stock markets are thriving. Bitcoin is trading above $63,000 for the first time ever, having set a new record at $63,724. The top crypto now has a market cap of $1.18 trillion, making it the world’s sixth largest asset.
“Still a bubble“
However, according to respondents in the BofA survey, Bitcoin is still a bubble. The bank surveyed 200 top investors with $533 billion in assets under management. 74% of these believe that Bitcoin is definitely a bubble, with 16% confident that it’s not and 10% refraining from the poll.
The investors further voted for Bitcoin as the second-most crowded asset, only trailing technology stocks with a 27% share of the votes.
However, BTC ranked well against cyclical stocks and the U.S Treasury. It also had a favorable rank on environmental, social and corporate governance.
The investors expressed great confidence with the stock market. Only 7% think the stock market is a bubble, with close to 70% claiming we’re in a late-stage bull market. Michael Hartnett, the BofA chief investment strategist remarked:
“Only 7% of investors think the U.S. equity market is in a bubble, 25% think early-stage bull market, and 66% late-stage bull market. Both macro and market optimism among global investors is running high, with prospects of a taper tantrum, inflation and higher taxes seen as more pressing risks.”
Despite the investors’ bearish sentiment, ownership of crypto in the US has continued to grow. A survey on Monday, April 12, by Magnify Money, revealed that 22% of Americans own some form of crypto. For millennials, this figure is higher at 35%, while for Gen Zers, it stands at 30%.
Coinbase IPO is critical, Wall Street believes
Many of the investors BofA polled view the Coinbase IPO as a key moment for the crypto industry. The American crypto exchange has debuted on the Nasdaq stock exchange in a direct listing, with its valuation standing at around $100 billion.
Julian Emanuel, the chief strategist at BTIG, a capital markets firm, observed, “That said, the Wednesday IPO of a prominent crypto exchange will offer another high-profile investment option. How Bitcoin reacts in the week ahead will set the tone for weeks to come.”
Coinbase has 56 million verified users and revealed it generated $1.8 billion in revenues in the first quarter of the year.
However, despite this, some critics believe the exchange is still overvalued. One of them, David Trainer, described the $100 billion valuation as “ridiculously high.” Trainer, who heads investment research firm New Constructs, believes that as the market matures, Coinbase will lose a huge portion of its market and profits to smaller exchanges. Speaking to Forbes, he claimed that Coinbase’s transaction margins will drop drastically as its rivals turn to poach tactics such as cutting fees. He pointed to Robinhood as a prime example of how it has taken on the former titans like Charles Schwab.