Bitcoin and US tech stocks, the biggest market bubbles now

According to a Deutsche Bank survey based on 627 market professionals responses in mid-January found that Bitcoin and US tech stocks are viewed by investors as the biggest market bubbles right now, and 89% think some financial markets are in bubble territory.

Bitcoin is viewed as a more extreme case, with half of respondents giving the cryptocurrency a rating of 10 on a 1-10 bubble scale. US tech stocks were seen as the next largest bubble, according to Deutsche Bank, with an average score of 7.9 out of 10 and 83% of respondents giving it a tech bubble rating of 7 or higher.

Meanwhile, investors also think that bitcoin and electric car manufacturer Tesla are not able to sustain the rise over the next year.

In a statement, the bank said a majority of readers think that they are more likely to halve than double from these levels with Tesla more vulnerable.

Bitcoin, the world’s largest cryptocurrency by market value rallied to an all-time high of nearly USD42,000 just two weeks ago before slipping sharply. It was up more than 800% from March 2020 lows, when the cryptocurrency cratered on the back of concerns about the coronavirus pandemic.

Some market speculators say the digital coin has been buoyed by increased interest from institutional buyers, and also the perception that bitcoin is an uncorrelated safe haven asset similar to gold. Meanwhile, skeptics, on the other hand, say bitcoin is a speculative asset and a market bubble likely to burst one day.

Tesla, meanwhile, also saw a substantial rise in its share price in 2020 which extended into the new year. The stock is up more than 700% from where it was trading 12 months ago.

Also, according to Deutsche Bank, 71% of respondents do not believe the Federal Reserve will tighten policy before the end of 2021, while a quarter of investors said economic growth or markets could force their hand.