It's Official: "Long Bitcoin" Is The Most Crowded Trade On Wall Street

Tyler Durden's picture

... at least according to BofA's latest, just released monthly Fund Managers Survey, in which 181 participants with $549bn in AUM responded to dozens of questions, among which "what do you think is the most crowded trade." In September, for the first time ever, the top answer, per 26% of respondents, was Bitcoin, (which as BofA handily reminds us was up as much as 344% YTD), #2 was "long Nasdaq" (up 20% YTD) according to 22% of fund managers, while the "Short US Dollars" (-11% YTD) was third at 21%. Note: long US$ was most crowded trade as recently as Mar'17.

Of course, this does not mean that everyone is long bitcoin; it just means that everyone thinks everyone else is long bitcoin...

Another notable change in September: "central bank policy mistake" is no longer the biggest tail risk - that honor now belongs to North Korea by some margin (34% of respondents) , followed by Fed/ECB policy mistake (21%) and Chinese Credit Tightening (15%).

 

Looking ahead, the smartest people on Wall Street said that over the next 6 months, a recession would be the most surprising event (54% of respondents), while an equity bubble least surprising (net -30%).

Finally, in terms of most over and undervalued assets, volatility was declared by far the most overvalued (54%), with sterling, oil, Italian equities and Chinese banks in distant 2nd through 5th slots.

Meanwhile, on macro, FMS growth optimism continues to sag (+62% in Jan to +25% today) but profit hopes rose a tad this month (+34%)…greater conviction in EPS than GDP; notable divergence in FMS perceptions of fiscal policy ("easy") vs. flatter yield curve shows US tax reform most obvious catalyst for steeper US curve.

What is also interesting is that "Mean reversion" has become a contrarian theme as investors cut expectation of higher bond yields: rotation back to QE themes of scarce "growth"  & "yield" (e.g. EM), away from "value" (Japan, banks) as investors shun mean reversion, slash expectations for "much higher" bond yields (+26% last Nov to 5%); energy ("value") UW largest since Mar'16, utilities ("yield") UW smallest since Aug'16.

To summarize: most on Wall Street are short volatility even as they suspect everyone else of being long bitcoin (explaining the tepid performance by the hedge and mutual fund community), nobody expects a recession although most admit the equity market is a bubble, and most are hopeful that the economy will surprise to the upside even as earnings outperformance is taken for granted.

Good luck trading that.

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dark pools of soros's picture

bunch of scared hedgies cant make cake with crypto

bwh1214's picture
This is what people think is the most crowded traded not what is the most crowded trade.  Ask 10 random people if they own bitcoin and tell me with a straight face it is the most crowded trade. 

 where Bitcoin may be going it might be good to know its origins…

Video: Bitcoin Prehistory

Ramesees's picture

If you think Bitcoin is a bubble - short it! There are 20 exchanges where you can do so with as little as $50 that are open to everyone and require no verification. Go make some easy money!!!!

hestroy's picture

Like all good parasites.

Ramesees's picture

I work at an investment fund in NYC and every trader, lender, and analyst I know has some crypto. Most of them prefer ETH though. Crypto is a constant topic of conversation at dinners, work, parties, etc. Lots of people sit around and trade shitcoins on Polo all day.

Finance and tech guys are very much in sync.

oldschool's picture

Is Polo still trading?  Seems to me they've practically fallen into a black hole.

Ramesees's picture

Yeah still largest Us exchange I think.

Creepy_Azz_Crackaah's picture

Long until short.  Just time it right.  That's all there is to it with all speculation trades. 

 

FREE "MONEY!!"

Manthong's picture

 

Geez...

I gotta get in at the top of this......

 

That trade always works...............

mpnut's picture

I doubt its "CROWDED".. Financial Institutions haven't even traded it with fervor.  You know its crowded when these same Institutions hype the sector while trading that same SECTOR..

StackShinyStuff's picture

"Of course, this does not mean that everyone is long bitcoin; it just means that everyone thinks everyone else is long bitcoin..."

 

Indeed.

2_legs_bahhhhhd's picture

Warning....Everything fraud Street touches eventually turns to shit.

dumbhandle's picture

They thought they could ignore support requests. Turns out this was incorrect. Gemini is good.  Heard Bittrex is good, too. Polo is off limits for me.  Too bad.  Good platform.

chuckymcgee's picture

Yeah polo is still trading. I lend with them, go ahead and borrow some for your short!

auricle's picture

Without futures to just naked short cryptos you first have to buy or be long cryptos before you can sell or be short cryptos. Look for a massive downdraft in the near term as the bankers take all your profits.

MANvsMACHINE's picture

BTC will crash when the stock market crashes. Margin calls whack every asset class. BTC will then dust itself off and start climbing again.

chuckymcgee's picture

Not at all. Bitcoin's movement has been totally uncorrelated with the markets. When stocks crash, people will double down on crypto. I trust math more than I trust the goverment.

surf2liv's picture

Do you see the joo parasite everywhere?  Can the tribe get together and rig every security?  Do they have access to Fed Rate decision beforehand?

Bay of Pigs's picture

Not a very good article but when people start saying "you can't lose", it's time to be concerned.

Consuelo's picture

 

 

Nah...   $13k by Feb.

And then $50k+++   when everyone around the world wakes up and wants to join the party.

I got it all figured out, dontcha know.   My super-duper future-reading special proprietary algo tells me so...

 

 

The central planners's picture

Did you mentioned the word bubble? What bubble?  i dont see any. 

Ramesees's picture

Overcrowded trade implies bubble.

ZorroHedge's picture

150 bn market is not a bubble market. Crypto will become a trillion $ market.

MANvsMACHINE's picture

Hi guess perception is reality these days. If everyone thinks everyone else is stupid, who is stupid? Does that achieve max stupid or only the perception of max stupid?

Stupid minds want to know!

jin187's picture

Perception is always reality with stock markets. Nevermind whether the company is profitable or not, the sky's falling, we gotta sell!

That's why Warren Buffet says when everyone agrees on something in the stock market, it's time to run the other way. The man might be an idiot when it comes to political issues, but he's pretty sharp when those issues fuck with his money.

HardAssets's picture

You're coming at it from a rational, trading mentality.

There are many crypto true believers.

They come at it like a religion.

TheReplacement's picture

Supposedly the IMF is going to blockchain.

Companies like Microsoft are incorporating blockchain into products like Azure.

Joe Blow will come to know that there is such a thing as blockchain and then he'll find out about the currencies.

Joe Blow may eventually lose faith in govenments and banks when the next crisis comes.

Gold and Silver will be in short supply.

Where oh where will Joe Blow turn to preserve/move his wealth?

Whether cryptos are valid for this or that or not, all that matters is where the sheep go to bleat.  The sheep will go where they are led and they are being led to the blockchain.  See first point about IMF.

shizzledizzle's picture

And settle in bitcoin... Nothing like getting paid in the currency you are betting against. 

tmosley's picture

So? You can turn that BTC into dollars within a few minutes.

shizzledizzle's picture

A lot can happen in a few minutes. 

tmosley's picture

Sounds like an excuse to me.

The Dutch Guy's picture

Please do so. I, myself go long. Works for years now.

giovanni_f's picture

It will go to 0. But in the meantime it will make us all rich. Buy now!

(I need some idiots I can sell to once BTC hits 10K US$)

The central planners's picture

So you basically suggesting  that the bubble is about to get nastier. When the regular broke joe get into it.

Arnold's picture

Lemme see what my shoeshine boy says....

jin187's picture

That's exactly what causes a bubble. A bunch of trendsetters invest in something, make tons of money, then they tell their not so savvy friends about it. Right when broke joe throws his money into the pot, that's when everyone else realizes shit is about to hit the fan, and pulls their money out, leaving broke joe holding the bag. Then broke joe wants someone to go to jail because he didn't understand how his high-risk speculation could lose all its value.

ejmoosa's picture

If fund managers are crowding into Bitcoin, it just means they are out of ideas and there is no where else to turn.

 

TheReplacement's picture

Let's see, cryptos or 100 year bonds that pay less than inflation....  so hard... can't decide.... help me!

DjangoCat's picture

Got that right.  There is no real return anywhere.

Bitcoin is an attempt to leave the building before the fire alarm goes off.

silverserfer's picture

wall stret traders show up whereever easy money is available to be made. the volitility in cryptos is irresistable. If you trade and want to make quick money that is the place to be. Might as well while it lasts. 

VD's picture

after knowing anything about linked prehistory vid, you have to be a real dumb shit to be playing in this Deep State space. (i've posted the paper in question in vid previously.)

affirmed_78's picture

How can an asset with a $70B market cap be the most crowded trade?  It's not possible.  This article is laughable.

Insatiant's picture

You lost me at Craig Wright.

Swampster's picture

Time for the Juice to shear their goyim sheeple!

adr's picture

So far 2017 has been the most insane year I can remember is just about every aspect. The irrational exuberance has felt like 1999 and 2007. The weather has been weird, people are out of their mind insane, and nothing is getting done. 

It feels like the stock market keeps going up, but the world is going backwards. 

But as the Obama era taught us, negative economic development is the most bullish news of all. 

_RRR_'s picture

so true. My biggest concern is that this will continue another 1-2 years

breaktwister's picture

Only 1-2 years? How about a lifetime of pain for red pillers as blue pillers happily gorge on the rubbish fed to them by TPTB.