The cryptocurrency has no value, even if the technology of the block chain could generate significant benefits for investors, says the investment arm of the largest insurer in Europe, which manages almost 500,000 million euros.
The question is when, not if, the bitcoin bubble is going to explode, says Allianz Global Investors.
The cryptocurrency has no value, even if the technology of the block chain could generate significant benefits for investors, says the investment arm of the largest insurer in Europe, which manages almost 500,000 million euros.
"From our point of view, its intrinsic value should be zero," said Stefan Hofrichter, the company's head of global economy and strategy, in a recent online publication. "A bitcoin is not a claim from anyone, unlike, for example, sovereign bonds, variable income or money on paper, and does not generate any income stream."
While the same argument could be applied to gold, the yellow metal has been widely accepted as a store of value for more than two thousand five hundred years, compared to less than ten years for bitcoin, he argued.
Manual case
In addition, the largest cryptocurrency in the world meets all the essential criteria of any asset bubble, such as excessive trading, the thinking of a "new era" and increased leverage, he wrote. Bitcoin fever is a bubble that seems out of a textbook, "one that is probably about to explode."
Hofrichter joins a chorus of voices that have expressed skepticism about the underlying value of the digital currency. Researchers from the University of Pittsburgh concluded that it is "an asset that lacks value according to traditional measures" and the economist Nouriel Roubini has described it as the "greatest bubble in the history of mankind".
Bitcoin traded up 0.7% to US $ 9,126 at 2:45 in the afternoon, Tokyo time. The currency reduced its advance by around 2% after Google said it would ban online ads to promote cryptocurrencies and initial coin offers starting in June. The digital currency has lost more than half of its value since its December peak.
Even so, the bursting of the bitcoin bubble will not have much impact on conventional asset classes, such as stocks and bonds, according to Hofrichter.
"The disappearance of bitcoin would have little impact in the 'real world', since the market for this cryptocurrency is still quite small in size," he said. "As a result, we believe that the risks to financial stability derived from bitcoin are insignificant, at least until now."