Stefan Hofrichter, Allianz’s Head of Global Economics & Strategy has developed 8 criteria to determine if an asset is in a price bubble. According to his evaluation “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.

Yet the blockchain technology that powers cryptocurrencies could bring significant benefits to investors.” [Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.] A visual representation of the digital Cryptocurrency, Bitcoin.

Photo Illustration by Chesnot/Getty Images Of Hofrichter’s 8 criteria, I don’t think all of them apply to every asset bubble, but some definitely do for Bitcoin. The first is “New-era” Thinking.

The phrase “It’s different this time” has led many assets to become overvalued and then have a sharp correction . If digital currencies aren’t “New-era” and “bleeding edge” nothing is.

This is similar to the Tech Bubble in 2000 to 2001 when any company that had an i in its name or utilized the Internet seemed to go up in price no matter what business it was in. Another criterion is Overtrading. Read more from…

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