In this photo illustration, a visual representation of digital cryptocurrency Bitcoin (BTC) is organized on a circuit board of a hard drive.
Yuriko Nakao | Getty Images
Bitcoin and U.S. tech stocks are seen by investors as the biggest bubbles in the market at the moment, according to a Deutsche Bank survey released on Tuesday.
The survey, which is based on responses from 627 market professionals between January 13th and 15th, found that the vast majority of investors (89%) think that some financial markets are in bubble territory.
Of those bubbles, bitcoin and U.S. tech stocks top the list. Bitcoin is seen as a more extreme case, with half of the respondents giving the cryptocurrency a rating of 10 on a bubble scale of 1 to 10.
US tech stocks were seen as the next biggest bubble, Deutsche Bank said, with an average score of 7.9 out of 10 and 83% of respondents giving it a tech bubble rating of 7 or more.
Investors also feel that bitcoin and electric car maker Tesla are more likely to fall than to rise next year.
“When asked specifically about the 12-month fate of Bitcoin and Tesla – an emblematic action of a potential technology bubble – most readers think they’re more likely to halve than double those levels, with Tesla most vulnerable according to readers, ”said Deutsche Bank said.
Bitcoin has been on a wild ride for the past few months. The world’s largest cryptocurrency by market cap rose nearly $ 42,000 just two weeks ago, before falling sharply. It is an increase of more than 800% compared to the lows of March 2020, when the cryptocurrency emerged due to concerns about the coronavirus pandemic.
Bulls say the digital currency was driven by increased interest from institutional buyers, as well as by the perception that bitcoin is an unrelated safe haven asset, similar to gold. Skeptics, on the other hand, say bitcoin is a speculative asset and a market bubble that is likely to burst one day.
Tesla, meanwhile, also saw a massive rise in its share price in 2020, which extended into the new year and crowned its CEO Elon Musk as the richest person in the world. The shares are over 700% in relation to the period in which they were traded 12 months ago.
And while investors may think that bitcoin, Tesla and other U.S. tech stocks are in bubble territory, it is unclear exactly what can “pop” these bubbles.
The “easy monetary situations” that support the bubbles are likely to remain, with 71% of respondents telling Deutsche Bank that they do not believe the Federal Reserve will tighten policy before the end of 2021. But a quarter of investors said that economic growth or markets can force your hand.
More investors say the launch of coronavirus vaccines is below expectations (41%) than those who say it has been better than expected (22%). Just over half of respondents said they saw life return to normal by the end of the year.