Stefan Hofrichter, head of global economics and strategy at Allianz (DE:ALVG) Global Investors, has penned a post where he describes Bitcoin as a bubble that will pop at any moment. He also believes that the cryptocurrency has no intrinsic value.
After summarizing Bitcoin’s rise to $20,000 in late December 2017 and its subsequent fall, he speculates that the hype surrounding the cryptocurrency is not yet ready to fade away.
“So is this the end of the hype about Bitcoin as the future of global currencies? Probably not yet, since speculation in Bitcoin and similar instruments appears set to continue for some time.” Hofrichter writes.
He also mentions that Bitcoin “ticks all of the boxes” of an asset bubble, emphasizing the idea that it “far surpasses the IT bubble of the 1990s.”
Among those “boxes” are the fact that Bitcoin is preferred by the criminal underground, its price is greatly inflated, and trading volumes have skyrocketed.
According to Hofrichter, the fact that the cryptocurrency isn’t subject to financial regulations might also play a role in its categorization as a bubble.
“This brings us to a key question: what is the fair value of a Bitcoin? In our view, its intrinsic value must be zero: 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,” Hofrichter adds.
He goes on to admit the same could be said about gold but notes that the precious metal has been “widely accepted” as an indicator of wealth for several centuries.
Hofrichter’s piece detailing the point of view of Allianz Global ends with a footnote about the merits of blockchain technology. It lauds the benefits of the technology and its potential to make the financial sector more efficient.
This sentiment is nothing new coming out of Allianz. In November 2017, its chief economic advisor told CNBC that Bitcoin is “more of a commodity than it’s a currency.
Fuente: inventing.com