Steven has been a cryptocurrency enthusiast since 2015 after learning about Bitcoin in an online forum. He is most excited by the application of blockchain technology in developing countries for financial inclusion.
The survey revealed that investors are increasingly optimistic about Bitcoin. The top cryptocurrency was the third-most crowded trade at 15%, beating traditional heavyweights such as gold and bonds.
Investors have been slashing their cash positions in 2020, for the first time in seven years, a new survey has revealed. Bitcoin is now the third-most crowded trade, the survey also indicated. After a bleak start to the year following the outbreak of the coronavirus pandemic, investors are now optimistic about a return to economic growth, the Bank of America Corporation (NYSE: BAC) revealed in its survey. In response, the investors have been reducing their cash positions for ‘riskier’ assets. The BofA survey revealed that cash reserves are down 4%, the first time since 2013 this has happened.
Known as the Global Fund Manager Survey, it involved 217 fund managers who collectively manage $534 billion in assets.
The survey revealed that investors are increasingly optimistic about Bitcoin. The top cryptocurrency was the third-most crowded trade at 15%, beating traditional heavyweights such as gold and bonds. Stocks still lead the category at 52%, with short dollar positions taking second place at 18%.
The survey further revealed that Bitcoin’s interest as a long-term asset is rising rapidly. 15% of the respondents now hold Bitcoin long positions, up threefold from just a month ago when it stood at 5%.
Aside from Bitcoin, investors revealed that they are quite optimistic about profitability in the next year, with the Pfizer coronavirus vaccine playing a bit part. As Coinspeaker reported, the Food and Drugs Administration (FDA) approved the emergency use of the vaccine recently. 100 million US citizens will receive the vaccine by March next year, with close to 3 million receiving it within the first week of approval.
85% of fund managers expect global profits to improve over the next 12 months, the best outlook since 2002, the survey noted.
Bitcoin Trade Attracts Asset Managers
The BofA report comes at a time when institutional interest in Bitcoin has been at an all-time high. After initially dismissing the cryptocurrency as too volatile, asset managers now view it as the best hedge against inflationary fiat currencies.
Daniel Masters, the chairman of European cryptocurrency asset fund manager CoinShares summed it up best in a recent interview:
This perceived career risk of investing in Bitcoin is fast migrating into a career risk for not having Bitcoin on your portfolio, and that’s a really stunning development.
Just yesterday, British asset fund manager Ruffer Investment Company revealed it had invested in Bitcoin. In a note to investors, the London-based company indicated it had bought $15 million worth of the crypto through one of its multi-strategies funds. The company, which has $27 billion in assets under management, described the move as ‘primarily defensive.’
As with several other asset managers, Ruffer views Bitcoin as a hedge against the continued debasement of most major fiat currencies. In a year that has seen a record amount of stimulus packages globally to aid coronavirus economic recovery, currency devaluation has been inevitable.
Ruffer told investors:
“We see this as a small but potent insurance policy against the continuing devaluation of the world’s major currencies. Bitcoin diversifies the company’s (much larger) investments in gold and inflation-linked bonds, and acts as a hedge to some of the monetary and market risks that we see.”
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