Citadel's Ken Griffin said Monday that bitcoin may be in a bubble.
"Bitcoin right now has many of the elements of the tulip bulb mania we saw back hundreds of years ago in Holland," said the billionaire hedge fund manager in an exclusive interview with CNBC's Leslie Picker.
Griffin, however, said he does believe the blockchain technology backing the cryptocurrency is valid.
"Blockchain's a very interesting technology that will have some very profound applications for society over the years to come," he said.
Blockchain creates a quick, permanent and secure record of transactions, eliminating the need for a third party such as a bank. Banks and other large corporations are testing how blockchain can help improve everything from supply chain management to global payments.
Digital currency bitcoin climbed more than $1,000 in a week to a record high of $9,732.76 on Monday morning, according to CoinDesk. The cryptocurrency has climbed 50 percent in November alone and now has a market value of about $161 billion, slightly more than General Electric.
"I think what is happening is people confuse bitcoin with blockchain," Griffin said.
"I get very worried that people that are buying bitcoins don't really understand what they're participating in other than the headline stories that it keeps going higher and 'I want to make sure I don't miss this opportunity to make some money,'" the billionaire said. "So is it a fraud? No. But these bubbles tend to end in tears. And I worry about how this bubble might end."
Griffin founded Citadel in 1990 and is its CEO. The hedge fund firm has more than $27 billion in assets under management. The investor has a net worth of $8.6 billion, according to Forbes.
Banking executives such as JPMorgan Chase's Jamie Dimon have criticized bitcoin and called it a "fraud." On the other hand, a few Wall Street veterans are buying bitcoin and starting their own "crypto-funds." In another step toward legitimacy, CME, the world's largest futures exchange, plans to launch bitcoin futures in December. The digital currency has come a long way from being a fringe asset.