"It just doesn't make sense. This thing is not regulated, it's not under control, it's not under the supervision" of any central bank, Alwaleed said in an interview on CNBC's "Squawk Box."
"I just don't believe in this bitcoin thing. I think it's just going to implode one day. I think this is Enron in the making," Alwaleed said.
The billionaire investor was referring to the massive accounting fraud that took Enron, a U.S. energy-trading and utilities giant, into bankruptcy in late 2001.
Bitcoin has shaken off an August split into bitcoin and bitcoin cash, and a Chinese crackdown in September on digital coins.
"Saying this is going to blow up is not profound. It does that on a regular basis," Ritholtz Wealth Management CEO and CNBC Contributor Josh Brown said Monday on CNBC's "Halftime Report." "You should expect regular blow ups because it's all speculative. Doesn't mean it's [not] going to outlive each and every blow up along the way."
Brown also said it should not be surprising that Alwaleed is critical of bitcoin, because of his ties to the authoritarian Saudi Arabian rulers. A major factor behind bitcoin's development is its ability to be a global currency outside government control.
Bitcoin trading is available in Saudi Arabia, according to exchange websites. However, the Saudi Arabian Monetary Authority warned in a July tweet about dealing with bitcoin because the digital currency — which is not supervised by the government — might have negative consequences on individuals' investments.
The monetary authority did not immediately respond to a CNBC request for comment on bitcoin's legality Monday.
Bitcoin's massive price gains are fueled by growing interest from some institutional investors and Japanese investors. Trading in Japanese yen accounted for about 62 percent of total bitcoin trading volume Monday, according to industry website CryptoCompare. Trading in U.S. dollars accounted for roughly 21 percent, the site showed.
But most major investors remain skeptical of bitcoin.
Alwaleed said Monday he agrees with JPMorgan Chase CEO Jamie Dimon, who last month called bitcoin a "fraud" that will eventually blow up.
BlackRock CEO Larry Fink has also called the digital currency an "index of money laundering" for its ability to facilitate illegal commerce on the internet.
However, JPMorgan and other financial institutions are investing in blockchain, the technology that enables bitcoin to transfer value nearly instantly without a third-party intermediary.
The development of digital currencies has also spawned the growth of token sales, or initial coin offerings, which have taken off this year. The coin sales have raised $3.04 billion, according to financial research firm Autonomous Next.
Jordan Belfort, the infamous "Wolf of Wall Street" penny stock broker, told The Financial Times in an interview published Sunday that initial coin offerings are the "biggest scam ever."
— CNBC's Fahiemah Al-Ali contributed to this report.