'Worthless' Bitcoin bubble is ready to burst - Allianz boss
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 benefits to investors, said the investment arm of Europe's biggest insurer, which manages almost €500bn. "Its intrinsic value must be zero," wrote Stefan Hofrichter, the company's head of global economics and strategy. "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, it 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, it "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".
He joins a chorus of commentators casting doubt on the underlying value of the digital currency. University of Pittsburgh researchers concluded it's "an asset which has no value by traditional measures" and economist Nouriel Roubini called it the "biggest bubble in human history".
Bitcoin traded 0.7pc higher at $9,126. It pared a 2pc advance after Google said it would ban ads promoting cryptocurrencies and initial coin offerings from June. (Bloomberg)