Bearish on bitcoin, bullish on oil: How Canadians plan to invest this summer

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FRANKFURT, Oct. 28, 2020 -- Photo taken on Oct. 28, 2020 shows the Bull and Bear sculptures outside the Frankfurt Stock Exchange in Frankfurt, Germany. German shares lost on Wednesday, with the benchmark DAX index down 503.06 points, or 4.17 percent, to close at 11,560.51 points. (Photo by Lu Yang/Xinhua via Getty) (Xinhua/Lu Yang via Getty Images)
Horizons ETFs Management Canada says investors are "overwhelmingly bullish" heading into Q3 (Photo by Lu Yang/Xinhua via Getty) (Xinhua/Lu Yang via Getty Images)

Canadians plan to ditch crypto for crude as the price of bitcoin falls and rebounding travel breathes life into the energy sector, according to one of the country's largest purveyors of exchange-traded funds (ETFs).

Investors and advisors surveyed by Horizons ETFs Management Canada picked Canadian energy as their most bullish asset class in the firm's third-quarter outlook survey released on Friday. Both aligned on their view of bitcoin (BTC-CAD), ranking the world's most popular cryptocurrency the most bearish among 16 investment categories.

"Heading into the third quarter of 2021, Canadian investors and advisors are overwhelmingly bullish across most market indices and asset classes," Horizons said in a news release. The Toronto-based financial services firm has over $19 billion in assets under management, and operates 95 ETFs on Canadian exchanges.

Horizons says its third-quarter 2021 Advisor and Investor Sentiment Surveys is based on responses from 342 investor and 166 advisor participants questioned between June 18 and June 30. Their forward-looking views cover the period from June 30 to Sept. 30. Participants weighed in on a range of investment categories from currencies and commodities, to cannabis and the burgeoning psychedelics sector.

Canadian energy stocks climb

Canadian energy stocks have benefited from a recent run-up in oil prices and expectations for rising fuel consumption this summer. The S&P/TSX Capped Energy Index has climbed more than 42 per cent year-to-date. Horizons says advisors added five percentage points to their positive view on Canadian energy in this latest survey, bringing their total bullishness score to 64 per cent. Investors added 11 percentage points, for a total bullishness of 62 per cent.

A year-to-date view of the iShares S&P/TSX Capped Energy Index ETF (XEG.TO).
A year-to-date view of the iShares S&P/TSX Capped Energy Index ETF (XEG.TO).

"On top of the strong tailwinds with energy prices rising, Canada has also faced some of the longest and most stringent restrictions in the developed world," said Mark Noble, executive vice-president of ETF Strategy at Horizons ETFs in the release. "Now that global travel opportunities and transport of goods globally are increasing, energy demand is on the rise, which has resulted in strong performance for Canada's energy sector."

Bitcoin's drop brings out the bears

Bitcoin surged from about US$11,000 last October to well over US$60,000 in April, and now trades in the US$30,000 range. The wild ride has been driven by a chaotic mix of factors, ranging from Tesla (TSLA) boss Elon Musk's Twitter account to regulatory crackdowns in parts of China.

A year-to-date view of Bitcoin versus the U.S. dollar.
A year-to-date view of Bitcoin in U.S. dollars.

"Following a 41.34 per cent decline in the price of Bitcoin during Q2 2021, the worst performance of any of the Q3 Surveys' measured asset classes, investors shifted their position from bullish to bearish, adding 15 percentage points to their negative sentiment, for a total of 50 per cent bearish overall," Horizons said.

Investment advisors upped their already pessimistic view on bitcoin for the third quarter of 2021, adding nine percentage points, for a bearishness score of 54 per cent.

What about pot & psychedelics?

Canadian and U.S. large-cap equities were strong performers in Q2 2021. While investors and advisors remain in the bull camp for Q3, they cautiously pared back expectations for the S&P/TSX 60 and the S&P 500, while raising their view on the Nasdaq 100.

Horizons says the outlook for emerging markets was one of the biggest gulfs in its Q3 survey. It was the third most-bullish sector for advisors at 61 per cent, a four percentage point drop from last quarter. Investors who were also bullish on international equities reduced their positive view by nine percentage points to 49 per cent overall.

Expectations for Canada's cannabis sector fell among investors and advisors. However, opinions on the burgeoning psychedelics space were mixed, with investors 46 per cent bullish, and advisors evenly split between neutral and bearish sentiment, at 34 per cent each, heading into Q3 2021.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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