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.
However, like many business leaders and analysts from traditional financial institutions, Allianz's Hofrichter says the blockchain technology behind bitcoin "clearly has potential merits," such as lower costs on verifying transactions.
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.
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.
