Chinese regulators aren’t the only ones getting nervous about the astronomical rally in bitcoin.
Bullish bets on the cryptocurrency are now considered the most crowded trade in financial markets, according to fund managers surveyed by Bank of America Merrill Lynch. Twenty-six percent cited bitcoin, surpassing the 22 percent who considered the most overheated wager to be the long trade on the Nasdaq Composite Index. Shorting the dollar was third, at 21 percent.
The cryptocurrency has risen more than four-fold this year amid greater acceptance of the blockchain technology that underpins the exchange method, global political uncertainty and increased interest in Asia.
China plans to ban trading of bitcoin and other virtual currencies on domestic exchanges, Bloomberg News reported Monday. The ban will only apply to trading of cryptocurrencies on exchanges, according to people familiar with the matter, who asked not to be named because the information is private. Authorities don’t have plans to stop over-the-counter transactions, the people said.
Bank of America’s survey was conducted Sept. 1 through Sept. 7 among money managers overseeing about $629 billion in assets.