Bitcoin is a bubble, inflation is temporary? See what global fund managers say

Golden Finance Blockchain June 17th According to the latest global fund manager survey results from Bank of America, the volume of "long Bitcoin" now ranks second among all transactions, second only to "long commodities". In addition, most fund managers believe that Bitcoin is still in a bubble and agree that the Fed's inflation is temporary.

Bank of America June Global Fund Manager Survey

Bank of America (BofA) released the results of its June Global Fund Manager Survey this week. The survey was conducted from June 4 to 10 and covered 224 fund managers around the world who currently manage a total of US$667 billion in funds.

During the survey, fund managers were asked many questions that investors are concerned about, including:

1. Economic and market trends;

2. How much cash the portfolio manager holds;

3. Which trades the fund manager believes are in an “over-traded” state.

According to fund managers’ feedback, “long commodities” is now the most crowded trade, surpassing “long Bitcoin” which is now ranked second. The third most crowded trade is “long technology stocks”, and the fourth to sixth are: “long ESG”, “short US Treasuries” and “long euro”.

Despite the recent pullback in Bitcoin prices, 81% of all fund managers surveyed still believe that Bitcoin is still in a bubble, a slight increase from May, when 75% of fund managers said Bitcoin was in a bubble. In fact, Bank of America itself has warned of a bubble in cryptocurrencies, with the bank's chief investment strategist saying in January that Bitcoin is the "mother of all bubbles."

At the same time, 72% of fund managers said they agreed with the Fed's statement that "inflation is temporary." However, 23% of fund managers believe that inflation is permanent. Federal Reserve Chairman Jerome Powell has repeatedly used the word "temporary" to describe the threat of inflation to the U.S. economy.

Despite this, many financial industry bigwigs have expressed their disagreement with Jerome Powell's views, including famous hedge fund manager Paul Tudor Jones and JPMorgan Chase CEO Jamie Dimon. Under market pressure, US inflation has reached its highest level since 2008. Although Federal Reserve Chairman Powell believes that inflation will eventually subside, he admits that it may still hover at the current level for a while in the near future, and the inflation rate may rise further.

What impact will the Fed’s latest monetary policy decision have on Bitcoin?

Before the Fed announced its latest monetary policy, Bitcoin's performance seemed neutral, with only a small amount of spot buying. However, on June 17, Jerome Powell announced the interest rate decision (implying that two rate hikes are expected by the end of 2023), the policy statement and the quarterly economic forecast (SEP) at a press conference, and announced that the Fed would maintain the benchmark interest rate in the range of 0-0.25% and a $120 billion bond purchase plan.

If this is the case, the outcome may not be very good for Bitcoin, as the hawkish stance may lead to a drop in the price of Bitcoin and even more crypto assets. However, Bitcoin is currently performing poorly, with prices still between $38,000 and $40,000, down only 2.4% in 24 hours, at $39,069.98 at the time of writing. The reason for the stable market reaction is likely because inflation expectations have already been factored into the price of Bitcoin, so when the Fed made its statement, market stability was a "hedging phenomenon".

On the other hand, although the cryptocurrency market has been hit, there are still many innovations in terms of industry technology development, which means that there are still many new stories in the market, so the positive market trend should not end so easily. For now, Bitcoin is still struggling near the $40,000 resistance level. Whether it can break through the resistance level in the short term or find a lower support level, let us wait and see.