Futures Now

Bitcoin is a 'gigantic price chase based on nothing': Cryptocurrency bear warns

Bitcoin’s price is a ‘classic mania,’ warns Wall Street veteran
Bitcoin’s price is a ‘classic mania,’ warns Wall Street veteran

Bitcoin has made some investors quite wealthy, but one Wall Street veteran won't touch it.

The Lindsey Group's Peter Boockvar believes the bitcoin boom is a classic mania that will ultimately inflict a lot of pain. He calls it a "gigantic price chase based on nothing."

"If bitcoin went to $50,000 or $5 tomorrow, I don't think either price would surprise anybody," the firm's chief market analyst said Tuesday on CNBC's "Futures Now." "Its concept I get — an alternative currency, an alternative form of transacting for goods and services. But the price itself is nothing more than a historic bubble."

In just the past six months, bitcoin has surged 541 percent and is now bouncing above $17,100. Bitcoin futures are up 12 percent since trading made its debut at the Cboe.

The big gains extend to its smaller competitors such as litecoin. It has ripped 260 percent higher over past week, gaining 70 percent on Tuesday alone.

"The problem with cryptocurrencies generally is that there's potentially an infinite amount. I mean even bitcoin is now forking and sort of spawning brother and sister coins like bitcoin cash," said Boockvar. "What good is it if you can spawn a new one every day?"

Boockvar, a CNBC contributor, is more comfortable investing in an asset that's thousands of years old versus one that's only 10.

"If bitcoin is being perceived as this alternative currency, where gold is one as well, ... I would not be surprised when the day comes when bitcoin falls. Maybe that's when gold eventually rallies," he said. "It's much more difficult getting gold out of the ground than having a laptop and creating some new cryptocurrency."

He said a variety of factors could spark a cataclysmic cryptocrash. The currencies could flame out, lose their novelty or a vital regulatory issue could emerge, according to Boockvar.

And, there's one particular vulnerability that's partial to the cryptospace.

"It could be hacked. It could be someone who loses their coins," Boockvar said.