The chief investment strategist at Bank of America sees Bitcoin as “the mother of all bubbles”. He compared the recent cryptocurrency rally to other bubbles and emphasized Bitcoin’s “increasingly speculative” investment behavior.
Bank of America warns of huge Bitcoin bubble
Bitcoin’s recent rally has troubled a number of prominent financial analysts who have warned of a huge bubble. Among them is Michael Hartnett, Chief Investment Strategist at Bank of America Securities.
He said on Friday that the recent spike in Bitcoin price could be another case of speculative mania, stressing that Bitcoin looks like “the mother of all bubbles.” The strategist believes that “violent” inflationary price movements in the markets have supported Bitcoin’s rally for the past two months. Hartnett noted that Bitcoin has outperformed other assets over the past few decades, with the price up about 1,000% since early 2019.
Bitcoin “inflates the doors of previous bubbles,” he said, holding up its performance against other past bubbles. These include gold prices rising more than 400% in the late 1970s, Japanese stocks in the late 1980s, and Thailand’s stock market in the mid 1990s. He also compared Bitcoin’s rally to dotcoms in the late 1990s and property prices in the mid-2000s. The strategist pointed out that before the collapse, these sectors were seeing triple-digit percentage gains.
Bitcoin’s price chart shows the price of BTC from 2019 to the present day. Source: Markets.Bitcoin.com.
Bank of America’s strategist didn’t say the price of Bitcoin will go down like other bubbles in the past. However, he noted that the rise in cryptocurrency prices is another example of “increasingly speculative” investment behavior.
Others who recently warned of a Bitcoin bubble include David Rosenberg, chief economist and strategist at Rosenberg Research. As early as December, he warned of a Bitcoin bubble and described BTC as “just a classic, herd-following, extremely crowded trade”. Another warning comes from Nouriel Roubini, Professor of Economics at NYU, aka Dr. Doom. “The price of Bitcoin is totally manipulated by a group of people, a group of whales,” he claimed in late December. “It has no fundamental value. We are close to the point where the hyperbolic bubble will burst. “
Do you agree with Bank of America on the Bitcoin bubble? Let us know in the comments below.
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