Global financial firm Allianz recently published a harsh assessment of Bitcoin. Stefan Hofrichter, Head of Global Economics & Strategy at Allianz Global Investors, writing under the category of investment themes and strategies, is of the opinion that Bitcoin is a huge fail. A bubble getting ready to pop;

“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. Admittedly, one could make the same argument about gold, but gold has been widely accepted by humankind as a thing of value for more than two-and-a-half thousand years – compared to less than a decade for bitcoin.”

The author bullets out the justification for a tulip like bubble:Moreover, Bitcoin ticks all of the boxes that we consider to be essential criteria of any asset bubble:

• “New-era” thinking. Bitcoin is perceived to be an entirely new kind of currency and a monetary innovation in the internet age.
• Overtrading. Trading volumes have increased by almost fivefold in the last five years, according to BIS data.
• Ultra-easy monetary conditions. Accommodative policy is still in place globally, despite a series of rate hikes 
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• by the US Federal Reserve.
• A lack of financial regulation. The “Wild West” bitcoin environment is only gradually being addressed by regulators around the world.
• The launch of related financial instruments. New products related to the bubbling asset class are popping up – from CBOE and CME futures contracts to the launch of “ICOs” (initial coin offerings).
• Rising leverage. Not only has private-sector leverage increased to record highs globally, but leveraged speculation in bitcoin is increasing.
• Swindles. Bitcoin has become the instrument of choice for many criminals, thanks to its ability to exist entirely outside of traditional banking channels.
• Significant overvaluation. Many other asset classes are pricey in today’s market, but bitcoin’s valuation seems to be without peer.

While Hofrichter may be a Bitcoin hater, he is a Blockchain believer.“… Blockchain (or distributed-ledger) technology clearly has potential merits – not least of which is blockchain’s ability to reduce significantly the costs of verifying transactions and networking.

”So is Allianz’s assessment correct? Is Bitcoin going to zero? Time will tell.

Discover more from Crowdinsider here:  https://www.crowdfundinsider.com/2018/03/130394-allianz-its-a-matter-of-when-not-if-the-bitcoin-bubb...