In this photo image, a visual representation of the digital cryptocurrency Bitcoin (BTC) is arranged on a hardware rotation board.
Yuriko Nakao | Getty Images
Investors are looking at Bitcoin and U.S. tech stocks as the biggest market bubbles right now, according to a Deutsche Bank study published Tuesday.
The study, which is based on responses from 627 market professionals between January 13-15, found that the majority of investors (89%) believe that some financial markets are in a bubble zone.
Out of these bubbles, U.S. bitcoin and tech shares are at the top of the list. Bitcoin is viewed as a more isolated issue, with half of respondents rating the cryptocurrency as 10 on a 1-10 bubble scale.
U.S. 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 higher.
Investors also believe bitcoin and electric car maker Tesla are more likely to fall than rise over the next year.
“When asked specifically about what happened 12 months of Bitcoin and Tesla – a stock brand of potential tech bubbles – most readers think they are more than half as likely from double these levels with Tesla are more vulnerable according to readers, “Deutsche Bank said.
Bitcoin has been on a wild ride in recent months. The world’s largest cryptocurrency by market value went up to a high of nearly $ 42,000 just two weeks ago before it slipped sharply. It’s up more than 800% from March 2020 below, when the cryptocurrency fell behind concerns about a coronavirus pandemic.
Bulls say the digital coin has been driven by increased interest from institutional buyers, as well as the perception that bitcoin is a safe haven asset not tied to gold. Skeptics, on the other hand, say bitcoin is a speculative asset and a market bubble that is likely to explode one day.
At the same time, Tesla saw a big climb in its share price in 2020 which expanded into the new year and crowned its CEO Elon Musk the richest man in the world. The stock is up over 700% from where it traded 12 months ago.
And while investors may think that bitcoin, Tesla and other U.S. tech stocks are in a bubble realm, it’s unclear what could “pop” these bubbles.
Bubble-friendly “easy money scenarios” are likely to remain supportive, with 71% of respondents telling Deutsche Bank that they do not think the Federal Reserve will tighten policy by the end of 2021. But a quarter of investors said that economic growth or markets could be pushing the hand.
More investors report that the distribution of coronavirus vaccines is falling lower than expected (41%) than those who said 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.