About US$10 billion was invested in shares last week, according to the BofA, while US$1.5 billion went into gold.
Bitcoin „is the door to previous bubbles“ according to Bank of America analysts, who say digital currency is „bubbling“, citing the „violent“ action of the „frothy“ price that has driven digital currency in the last two months.
The bank said that cryptomime has soared in the past 12 months and reached levels similar to other bubbles, such as China’s in the late 1990s, 2000s and gold in the 1970s.
„Foaming prices, greedy positions, inflationary formulators and desperate […],“ said BofA chief investment strategist Michael Hartnett.
Bitcoin mother of all bubbles
Bank of America is one of the largest financial institutions in the world, serving approximately 56 million customers in the United States. The bank is among the world’s leading wealth management companies.
The bank recommended selling a number of shares due to „sparkling prices“ after its data showed that investors were invading the money markets and gold funds, while the stock market exuberance declined slightly.
The BofA said the trend to „buy everything“ in 2020 had reached 2021, but expected a slowdown in risky assets (bitcoin) as „politics, positioning and profits“ peaked around March.
About $10 billion was invested in stocks last week, according to the BofA, while $1.5 billion went into gold.
It is not clear yet how much investment went into Bitcoin, with GrayScale alone attracting about half a billion a week at the end of December.
Investors have been investing in gold and Bitcoin as the dollar weakens with the mass printing of cash.
In addition, digital currency is being adopted as a portfolio diversification after numerous studies conclude that the asset increases risk-adjusted returns.
This, however, may look like a bubble because it is the first time we are witnessing the launch and integration of an asset that was not subject to the laws of wealthy investors.
Startups like the then Facebook or Google are closed to the public in the early stages by the Securities Act of 1933.
At this stage of rapid growth and rapid appreciation, the Bitcoin Millionaire company is not publicly traded and therefore does not have a price that we can all invest in.
However, it does have a private price that is affordable only to the rich and banks. If that price were accounted for too, all those firms would look like a huge massive bubble.
So it is not that Bitcoin is a bubble. It is more that, for the first time, we are witnessing the true open public pricing of an asset from its inception.
An asset that is growing in adoption and therefore is growing rapidly in price because bankers did not first buy all the shares or currencies to sell them to the public at a high price in an Initial Public Offering (IPO) as they did with Facebook, Google, and all the other companies.
Showing a disconnect between the rich first and then the rest, for everyone first based on merit.
This difference explains why the term „bubble“ is vomited every time Bitcoin goes up.
If the bankers had bought it before everyone else then it would have been a bubble.
Bitcoin, however, was publicly released at a price of zero and at a zero market capitalization, unlike any asset before it, perhaps in history.
So, if Bitcoin is a bubble, the rapid increase in value of any growing startup is a bubble too, something that would make everything a bubble, and therefore none.
Translated with www.DeepL.com/Translator (free version)