It’s a matter of when, not if, the Bitcoin bubble will pop, according to Allianz Global Investors.
The cryptocurrency is worthless, even if blockchain technology could bring significant benefits to investors, said the investment arm of Europe’s biggest insurer, which manages almost €500 billion ($748 billion).’
Bitcoin slumped to the lowest level in more than a month after Google said it will ban online advertisements promoting cryptocurrencies.
“In our view, its intrinsic value must be zero,” Stefan Hofrichter, the company’s head of global economics and strategy, wrote in a recent web post. “A bitcoin is a claim on nobody – in contrast to, for instance, sovereign bonds, equities or paper money – and it does not generate any income stream.”
While one could make the same argument about gold, the yellow metal has been widely accepted as a store of value for more than two-and-a-half thousand years — compared to less than a decade for Bitcoin, he said.
In addition, the world’s largest cryptocurrency “ticks all of the boxes” of the essential criteria for any asset bubble, including overtrading, “new-era” thinking and rising leverage, he wrote. Bitcoin mania is a textbook-like bubble, “one that is probably just about to burst.”