Bitcoin is in a Bubble – Bank of America Survey

Summary:

Bitcoin is on a consolidation pattern ahead of the Fed interest rate decision. According to Bank of America survey, Bitcoin is in a bubble.

Bitcoin price is reacting to the recent survey by Bank of America, where most of the fund managers referred to the crypto as a bubble. Notably, the sampled 207 investors have assets worth $645 billion collectively. Other than commodities, the long position in the Bitcoin market is the most crowded.

In the recent poll, 80% of fund managers maintained that Bitcoin is a bubble waiting to burst. The figure is a rise from 75% in May. The economists’ scepticism stems from uncertainties on the regulation of the crypto industry. Besides, Bitcoin has recorded extreme volatility in the recent past.

The survey also touched on inflation, which will be a key driver of Bitcoin price with the Fed interest rate decision in focus. 72% of the sampled investors are of the opinion that the ongoing inflationary pressures are transitory. At the same time, 63% expect the US central bank to hint at tapering from August/September. A hawkish tone may be bearish for Bitcoin price.

BTC/USD technical outlook

Bitcoin price is in a consolidation pattern ahead of the Fed interest rate decision. At the time of writing, it was down by 0.32% at 40,043.46. Notably, it has been seesawing around the crucial level of 40,000 since the beginning of the week. On a two-hour chart, it is trading above the 25 and 50-day EMA.

With a dovish tone from the Fed, I expect the price to break out on the upside to the prior resistance level of 42,607.37. On the other hand, a hawkish tone may push the price past the current support level of 39,645.56 to 38,016.63.