Bitcoin To Suffer The Same Fate As Other Bubbles

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 …

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

Asset bubble criteria

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. Bitcoin volumes have increased almost five times in the last five years. I would extend this to a rapid rise in an asset’s price. It seems a bubble is typically formed (but only visible in hindsight) when there is a swift upward price movement. The upward trend gets investors to pile in and the “greater fool theory” comes into play. Unfortunately, when there is a rush for the exits the price can drop like an elevator.

One criterion Hofrichter has is Significant Overvaluation, but I’m not sure how to apply it in this case. While this makes sense, a “concern” I have about using this regarding Bitcoin is what benchmark to value it. It doesn’t generate any revenue or profits, so traditional methods don’t work.

It does have a cost to create it, but that can vary significantly by what location is used to mine it. Most other assets have some valuation metric, but Bitcoin doesn’t seem to have one. Therefore it is hard to say it is overvalued.

Hofrichter added, “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. Yet from our perspective, bitcoin has serious flaws: its trajectory resembles a textbook case of a financial-market bubble, and it is lacking several key qualities that would qualify it as a currency.”

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Allianz Together With FC Barcelona Calls out to Explorers to Show How Technology Will Transform …

Last Thursday, March 15th, Auditorium 1899 hosted a new “Explorer” conference, within Allianz’s Global Explorer Program, on this occasion in collaboration with FCB Innovation Hub. The Global Explorer Program makes a stop in Barcelona, after visiting Mexico City, Marrakesh and Hong Kong. Over 250 …

(Photo: https://mma.prnewswire.com/media/654741/Allianz_Global_Explorer_Program.jpg )

Last Thursday, March 15th, Auditorium 1899 hosted a new “Explorer” conference, within Allianz’s GlobalExplorer Program, on this occasion in collaboration with FCB Innovation Hub. The Global Explorer Program makes a stop in Barcelona, after visiting Mexico City, Marrakesh and Hong Kong. Over 250 attendees, including entrepreneurs, innovation experts and professionals from the sports and healthcare sectors, debated the transformational effects of emerging technologies on the future healthcare paradigm. The event took the format of an expert panel which included Francesc CosPH. D., Head of Sports Performance at FC Barcelona, Martin Meyer-Gossner, Business Consultant at Allianz SE, Isabel Pérez, CEO of Wimu / Real Track Systems, Marie André Destarac, Senior Robotics Engineer at Aura Robotix and Helena Torras , CEO & Co-Founder, B-Wom.

The Explorer Program is Allianz’s conscious effort to forge an alliance with the new generation of people whose future is at stake. These collection of worldwide micro-conferences reaches out to explorers globally to better understand the future of risks, to inspire and get inspired and to support visionaries. The challenges of the conferences are also prolonged and channeled to a more global level. “As one of the world’s largest global insurer, it’s our job to understand how the technological disruptions will improve the risk prevention to better serve and protect those who dare,” said Jean-Marc Pailhol, Head of Group Market Management and Distribution at Allianz SE.

After this stop in Barcelona, the Explorer Program will continue its course towards other amazing cities of the world, inviting to join the challenge of changing the future to more explorers. Find out more about the Explorer Program and the incoming challenges that it will present at: explore.allianz.com

SOURCE Allianz

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Major European Insurance Company Predicts Collapse of Bitcoin

The real value of bitcoin is zero, the head of the Allianz department of global economics and strategy, Stefan Hofrichter, said, cited by Bloomberg. “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,” the …

The real value of bitcoin is zero, the head of the Allianz department of global economics and strategy, Stefan Hofrichter, said, cited by Bloomberg.

“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,” the financial expert said.

He also noted that although the same can basically be said about gold, the big difference is that the precious metal has been recognized as a store of value all over the world for 2,500 years.

READ MORE: Bitcoin Falls Below $8,000 After Google Vows to Ban Cryptocurrency Ads

The number of Google requests referring to “bitcoin” has fallen by 82 percent since December 2017, Bloomberg noted, citing the Google Trends data.

The number of tweets about the cryptocurrency fell to 63,000 by mid-March from 155,600 in early December 7, the agency added, referring to BitInfoCharts statistics.

In addition, since December 13, the amount of bitcoin transactions has decreased by 60 percent, according to Blockchain.info.

Bloomberg associates the decreasing interest in the crypto currency with a drop in its value. At the end of 2017, bitcoin reached its historic maximum of about 20,000 dollars, but over the last month its price has been fluctuating around 8,000-11,000 US dollars.

On March 13, investment bank Goldman Sachs warned that in the near future bitcoin could drop to 5,000 US dollars.

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Bitcoin’s intrinsic value ‘must be zero’: Allianz

“The hyperbolic price movements of bitcoin since its early 2009 inception have been very bubblelike in nature,” wrote Stefan Hofrichter, head of global economics and strategy. “And among more recent examples, bitcoin far surpasses the IT bubble of the 1990s and the Japan bubble of the 1980s.”.
Getty Images

Kick it while it’s down.

As bitcoin BTCUSD, -2.57%continues to stumble, on track to record its eighth losing day over the past ten, financial services firm Allianz stoked the fire in an online report, saying the No. 1 digital currency ticks all boxes of a typical bubble asset.

“The hyperbolic price movements of bitcoin since its early 2009 inception have been very bubblelike in nature,” wrote Stefan Hofrichter, head of global economics and strategy.

“And among more recent examples, bitcoin far surpasses the IT bubble of the 1990s and the Japan bubble of the 1980s.”

Read: ‘Bitcoin is a bubble,’ says the head of the world’s largest hedge fund

The lack of regulation, the launch of new products, its rapid increase in trading volumes and the use for criminal activity are some of the criteria that place bitcoin in the category of a bubble asset (see chart below).

Allianz

“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,” he wrote.

Like many recent analysts, Hofrichter said the technology that underpins cryptocurrencies—blockchain and distributed ledger—could provide benefits, especially in the financial services sector as companies seek to reduce transaction costs.

“It is this aspect of cryptocurrencies in general—and not the specific cryptocurrency du jour—that we as an asset-management firm find to be the most interesting,” said Hofrichter.

While the crypto community may feel the brunt of any demise, the chance of contagion is low, Allianz said.

Opinion:Why bitcoin is worth exactly $0 (and blockchain might be very valuable)

“In our view, bitcoin’s demise would have few spillover effects on the ‘real world,’ since the market for this cryptocurrency is still quite small in size. As a result, we believe that the risks to financial stability stemming from bitcoin are negligible—at least as of today.”

CryptoWatch:Check bitcoin and cryptocurrency prices, performance, and market capitalization, in one dashboard

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iRobot Co. (IRBT) Shares Bought by Allianz Asset Management GmbH

iRobot logo Allianz Asset Management GmbH lifted its position in iRobot Co. (NASDAQ:IRBT) by 977.9% during the fourth quarter, according to its most recent Form 13F filing with the Securities and Exchange Commission (SEC). The fund owned 126,662 shares of the industrial products company’s …

iRobot logoAllianz Asset Management GmbH lifted its position in iRobot Co. (NASDAQ:IRBT) by 977.9% during the fourth quarter, according to its most recent Form 13F filing with the Securities and Exchange Commission (SEC). The fund owned 126,662 shares of the industrial products company’s stock after acquiring an additional 114,911 shares during the period. Allianz Asset Management GmbH’s holdings in iRobot were worth $9,715,000 as of its most recent filing with the Securities and Exchange Commission (SEC).

Several other large investors have also recently modified their holdings of the company. BlackRock Inc. boosted its stake in shares of iRobot by 3.4% in the fourth quarter. BlackRock Inc. now owns 3,778,273 shares of the industrial products company’s stock worth $289,792,000 after acquiring an additional 123,764 shares during the last quarter. Arrowstreet Capital Limited Partnership boosted its stake in shares of iRobot by 47.5% in the fourth quarter. Arrowstreet Capital Limited Partnership now owns 978,328 shares of the industrial products company’s stock worth $75,038,000 after acquiring an additional 315,233 shares during the last quarter. Old Mutual Global Investors UK Ltd. boosted its stake in shares of iRobot by 106.3% in the fourth quarter. Old Mutual Global Investors UK Ltd. now owns 689,707 shares of the industrial products company’s stock worth $52,900,000 after acquiring an additional 355,441 shares during the last quarter. Global X Management Co. LLC boosted its stake in shares of iRobot by 127.6% in the fourth quarter. Global X Management Co. LLC now owns 304,133 shares of the industrial products company’s stock worth $23,327,000 after acquiring an additional 170,502 shares during the last quarter. Finally, Rothschild Asset Management Inc. boosted its stake in shares of iRobot by 10.0% in the third quarter. Rothschild Asset Management Inc. now owns 293,961 shares of the industrial products company’s stock worth $22,653,000 after acquiring an additional 26,719 shares during the last quarter. 89.32% of the stock is currently owned by hedge funds and other institutional investors.

In other iRobot news, Director Andrew Miller sold 441 shares of iRobot stock in a transaction on Wednesday, December 27th. The stock was sold at an average price of $80.11, for a total value of $35,328.51. Following the sale, the director now owns 4,670 shares in the company, valued at $374,113.70. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available through the SEC website. Also, CEO Colin M. Angle sold 45,200 shares of iRobot stock in a transaction on Tuesday, December 26th. The shares were sold at an average price of $80.06, for a total value of $3,618,712.00. Following the completion of the sale, the chief executive officer now owns 534,663 shares in the company, valued at approximately $42,805,119.78. The disclosure for this sale can be found here. Company insiders own 4.49% of the company’s stock.

iRobot Co. (IRBT) opened at $70.27 on Tuesday. iRobot Co. has a 1 year low of $55.77 and a 1 year high of $109.78. The company has a market capitalization of $1,960.00, a P/E ratio of 32.09, a P/E/G ratio of 1.98 and a beta of 1.16.

iRobot (NASDAQ:IRBT) last announced its quarterly earnings data on Wednesday, February 7th. The industrial products company reported $0.54 EPS for the quarter, topping the Zacks’ consensus estimate of $0.25 by $0.29. iRobot had a return on equity of 12.62% and a net margin of 5.77%. The firm had revenue of $327.00 million for the quarter, compared to the consensus estimate of $319.02 million. During the same quarter last year, the business posted $0.45 earnings per share. The firm’s revenue was up 53.9% compared to the same quarter last year. analysts expect that iRobot Co. will post 2.3 earnings per share for the current fiscal year.

iRobot announced that its board has approved a share buyback plan on Tuesday, February 27th that allows the company to repurchase $50.00 million in outstanding shares. This repurchase authorization allows the industrial products company to buy shares of its stock through open market purchases. Stock repurchase plans are typically a sign that the company’s leadership believes its shares are undervalued.

IRBT has been the topic of a number of research analyst reports. Citigroup initiated coverage on iRobot in a research note on Monday, December 4th. They issued a “neutral” rating and a $74.00 price target on the stock. BidaskClub raised iRobot from a “buy” rating to a “strong-buy” rating in a research note on Wednesday, December 27th. Sidoti lowered iRobot from a “buy” rating to a “neutral” rating in a research note on Tuesday, January 30th. Piper Jaffray Companies reiterated a “neutral” rating on shares of iRobot in a research report on Thursday, February 8th. Finally, JPMorgan Chase & Co. upgraded iRobot from an “underweight” rating to a “neutral” rating and set a $61.00 price objective on the stock in a research report on Friday, February 9th. One investment analyst has rated the stock with a sell rating, seven have assigned a hold rating, three have issued a buy rating and one has issued a strong buy rating to the company. The company has an average rating of “Hold” and a consensus target price of $68.80.

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iRobot Profile

iRobot Corporation is a consumer robot company, which is engaged in designing and building robots. The Company’s portfolio of solutions features various technologies for the connected home and various concepts in mapping, navigation, mobility and artificial intelligence. The Company sells various products that are designed for use at home.

Want to see what other hedge funds are holding IRBT?Visit HoldingsChannel.com to get the latest 13F filings and insider trades for iRobot Co. (NASDAQ:IRBT).

Institutional Ownership by Quarter for iRobot (NASDAQ:IRBT)

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