I do say that even though l usually do not believe in calling out bubbles in general (many people who did in the past were either wrong or they called out bubbles year after year, thus making it pretty much a useless prediction).
I believe in efficient financial markets most of the time, meaning that future prices are mostly unpredictable and that asset prices reflect all the available information that is a available at the time (while future prices are mostly unpredictable high asset prices usually imply lower future returns whereas low asset prices, as measured by the PE ratio (price-earnings), usually tend to be followed by subsequent higher returns).
The value of a financial asset, be it the stock of a company or real estate, is ultimately determined by its economic fundamentals. More specifically, economic theory asserts that the fundamental value is pinned down by the net present value of all future cash flows (discounted by the rate of interest). Of course, future cash flows are inherently uncertain and fundamentals are thus relatively hard to assess.
Both in the case of stocks and real estate, however, there are productive investments that stand behind the financial value of the asset. In the case of Bitcoin, however, there is no future cash flow whatsoever. The value of Bitcoin can thus not be pinned down by any fundamentals. And since the supply of Bitcoin is more or less fixed in the short to medium run, indeed this is the whole pointless idea of many crypto-currencies, their value is purely driven by speculative demand. This feature, of course, can explain the enormous price volatility of the crypto-currencies. Now you might say that those assets are more like fiat money, which after all also does not yield any future cash flows. There are, however, some very important differences between crypto-assets (a better name than crypto-currencies) and fiat money.
Fiat money like the US dollar derives its value from three fundamental facts:
First, it is generally accepted as medium of exchange and unit of account. All goods and services in the US are priced in dollars and everybody accepts the dollar as currency.
Second, the value of the dollar is protected by the Federal Reserve, which ensures its price stability. And yes, the Fed has been doing a good job in recent decades keeping inflation at bay and ensuring price stability with the 2% inflation target. Note that the Fed being able to issue unlimited amounts of fiat currency in times of crisis is a feature of the system and not a bug. When money demand soars, the Fed can issue more dollars to ensure price stability instead of accepting deflation. Ironically Crypto-assets would have display much more stability if more issuance would be accepted during times when demand goes up.
Finally, the US government only accepts dollars to pay your taxes, which is fundamentally what gives the currency value.
Note that Bitcoin does not fulfil any of these conditions. It is not accepted as medium of exchange. Very few goods are priced in Bitcoin and its enormous price volatility makes it pretty much useless as a currency. There is nobody behind the system which ensures price stability. The fundamental value of Bitcoin can be many thousands of dollars, it could be zero, or anything in between (this does not mean that blockchain technology does not have any value), as it is purely driven by speculative demand. Most likely, its real value is close to zero as governments will attempt more and more to crack down on crypto-assets, and rightly so (they are used a lot in illegal activities as they are very hard to trace).
Many of the major banks in the US just announced that they will make it impossible for clients to buy crypto-currency with credit card debt, as the counterparty risk seems to be quite high. Banks are clearly worried about the risks of the bubble bursting as well as the risks that come from hackers stealing millions of dollars of Bitcoin from some of the exchanges.
NOT MONEY !!!