Hartnett points out in a recent report that the dramatic increase in bitcoin over the past two years – an increase of about 1,000% since the beginning of 2019 – is far greater than the gains of other assets that have seen a massive increase in the past a few decades .
This includes an increase in gold prices of more than 400% in the late 1970s, as well as other notable investment fads: Japanese stocks in the late 1980s, Thailand’s stock market in the mid 1990s, dot com in the late of the 1990s and housing prices in the mid-2000s. All of these sectors enjoyed three-digit percentage gains before falling to the ground.
More recently, Chinese stocks, biotech companies and Big Tech FAANGs have also seen huge gains.
Hartnett did not predict that bitcoin prices would fall per se. Instead, he cited the foam in cryptocurrency prices as yet another example of “increasingly speculative” investment behavior. He also warned of increased interest in IPOs and SPACs for large unicorn startups.
Hartnett is not the only one to issue bitcoin alarms. Given that the US dollar has stabilized somewhat recently, some warn that one of the bulls’ great cases of owning bitcoin – as a hedge against the currency’s decline – no longer exists.
“Bitcoin hunters here are not protecting themselves against a collapse of the dollar, they are simply paying twice as much for an ‘asset’ than Thanksgiving,” said Mike O’Rourke, chief market strategist at JonesTrading , in a report on Thursday.
Most investors ignored BofA’s warning on Friday. Bitcoin went up slightly. It has increased by more than 20% in just the past five days.