A new survey from Deutsche Bank suggests that some big pocketed investors are betting on the bubble of Bitcoin and Tesla to burst. Most money managers believed that the likelihood of Bitcoin price dropping by 50% is higher than it doubling in the next year.
Are money managers bearish on Bitcoin and Tesla?
The price of Bitcoin has tripled in the past three months. Money managers surveyed by Deutsche Bank aren’t confident that this will continue for long. On a scale of 1 to 10, almost 50% of the surveyed participants rated Bitcoin 10 which means it is a financial bubble. They showed a similar response for automaker Tesla and said that there is a higher likelihood that their prices will halve in the coming year.
Money managers are individuals or firms that buy and sell securities for their clients. They have a fiduciary responsibility to manage their clients’ money in a responsible way. Their outlook on both Tesla and Bitcoin suggests that they are not confident about their price.
What is a bubble?
A financial bubble is a situation where the price of an asset grows more quickly than its inherent value. This could happen because of media interest in the asset or rising investment trends. The perceived value of an asset eventually reaches a stage where it becomes unsustainable and the bubble eventually pops. Bitcoin went through a similar situation in December 2017-January 2018 when its price rose massively and reached its then all-time high of $20,000. The bubble burst and the crypto markets entered a year-long bear phase known as the crypto winter.
Bitcoin’s current price is $36,000 which has tripled in the past three months. Chief investment strategist at Bank of America Global Research Michael Hartnett, Bitcoin is the “mother of all bubbles.” At the time, Bitcoin hit $40,000 only to fall back to $32,000.