Bitcoin bubble ‘just about to burst,’ major money manager says

Bitcoin prices are in a bubble that will burst in the near future because the cryptocurrency has many inherent flaws, Allianz Global Investors said in a report.

“It appears to us that bitcoin mania is a textbook-like bubble – and one that is probably just about to burst,” the asset manager’s head of global economics and strategy, Stefan Hofrichter, said in an online post distributed Friday. “As a currency and asset class, bitcoin has potentially fatal flaws – which is why we believe it’s a matter of when, not if, the bitcoin bubble will pop.”

Bitcoin has fallen sharply since leaping 2,000 percent in the 12 months through December to a record high above $19,000. The cryptocurrency was trading near $8,700 on Wednesday, according to CoinDesk’s bitcoin price index.

Allianz has 498 billion euros ($615 billion) in assets under management, according to its website.

Compared with other bubbles, bitcoin is almost off the charts

Source: Allianz

The cryptocurrency “ticks all of the boxes that we consider to be essential criteria of any asset bubble,” including a fivefold surge in trading volumes over the last five years, lack of financial regulation and the launch of related financial instruments such as bitcoin futures, the Allianz report said.

Neither does bitcoin have any intrinsic value because it does not have a claim to the assets of a government or company and does not generate any income, Hofrichter said. He added that bitcoin is also not a viable currency because of high transaction fees, high price volatility and inability to be used as a store of value…

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