Bitcoin is still a bubble despite price crash: BofA survey

Fund managers aren’t sold that bitcoin (BTC-USD) is a screaming buy after the cryptocurrency’s rout. 

Eighty-one percent of fund managers polled in a new Bank of America survey say bitcoin is still a bubble despite the steep price pullback. Investors view bitcoin as the second most crowded traded (investors love bitcoin perhaps too much) behind being long commodities. 

A total of 224 fund managers with $667 billion in assets under management participated in the survey.

To be sure, bitcoin prices have had a rough go of it lately as investors seemingly fixate on every bearish tweet from crypto influencer Tesla CEO Elon Musk. 

Bitcoin prices plunged roughly 37% in May, and are down 38% from their mid-April peak of $64,829.

Is bitcoin a bubble despite recent crash?

Prices have received a boost this week from bullish comments by money manager Paul Tudor Jones, who called bitcoin a good portfolio diversifier. At $40,000 though, bitcoin prices remain not too far removed from the early June lows of around $33,000.

Meanwhile, others on Wall Street are warning the downside risk in bitcoin continues to be high.

J.P. Morgan strategist and bitcoin expert Nikolaos Panigirtzoglou argued recently that medium-term fair value for bitcoin is in the $24,000 to $36,000 range.

The analyst thinks the May crash in bitcoin has badly weakened institutional demand, which is likely to keep prices under pressure for the near-term.

“There is little doubt that the boom and bust dynamics of the past weeks represent a setback to the institutional adoption of crypto markets and in particular of Bitcoin and Ethereum. We note that the mere rise in volatility, especially relative to gold, is an impediment to further institutional adoption as it reduces the attractiveness of digital gold vs. traditional gold in institutional portfolios,” Panigirtzoglou said.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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