Bitcoin is still being called a bubble after 35% crash in May: Survey

The view that Bitcoin is a hallmark of speculative excess and froth is still going strong, even after last month’s 35% plunge.

About 80% of fund managers surveyed by Bank of America Corp. called the market a bubble, up from 75% in May. The poll, which captures the view of 207 investors with $645 billion in assets, said “long Bitcoin” is the second-most crowded trade after commodities.

The results point to a skepticism among some professional managers about whether crypto is a viable asset class, given its extreme volatility and regulatory uncertainty. Bubble fears are nothing new for cryptocurrencies, and plenty of investors have voiced doubts over the wisdom of wading into an asset that has no fundamental underpinning.

Even though prices have tumbled, investment banks are still embracing the emerging asset class. Goldman Sachs Group Inc. said it plans to roll out derivatives tied to Ethereum to clients, and Cowen Inc. plans to offer “institutional-grade” custody services for cryptocurrencies.

Prices also got a boost this week from veteran hedge fund manager Paul Tudor Jones, who reiterated his view that Bitcoin is a good hedge against inflation.

“I like Bitcoin as a portfolio diversifier,” Tudor Jones of Tudor Investment Corp. said in an interview with CNBC. “Everybody asks me what should I do with my Bitcoin? The only thing I know for certain, I want 5% in gold, 5% in Bitcoin, 5% in cash, 5% in commodities.”

                 Other highlights from survey, which was conducted June 4 to 10, include:

• 72% of investors say inflation is transitory

• 63% expect Federal Reserve to signal tapering in August-September

• Inflation and bond market taper tantrum tied for the top tail risk

• Allocation to bonds at three-year low (net -69%), while stocks back up to 2021 highs (61%)

• Any equity market correction in the next six months likely to be less than 10%, according to 57% of investors

• Managers favor a mix of value and tech stocks as best-performing assets in next four years

• Allocation to Eurozone equities increased to net 41% overweight, highest since Jan. 2018

• Allocation to U.S. equities remained at 6% overweight

• Exposure to U.K. stocks increased to 4% overweight, highest since March 2014