Her Majesty’s bank, Couts, has compared Bitcoin’s astronomical rise to the infamous dotcom bubble where investors lost over a trillion dollars.
While Nordea Bank CEO Casper von Koskull said: “If you somehow allow Bitcoin to live without controls, then, given the billions we spend on financial regulation as a financial system, I think it’s actually a joke that you then just let something like Bitcoin live.
“I don’t get it, it’s absurd.”
The digital currency has hit another record high after passing $14,000 (£10,460) for the first time today just hours after hitting $12,000 (£8,970).
Despite widespread warnings of a bubble among financial institutions, investors ploughed cash into Bitcoin yesterday in an extraordinary 24 hours for the currency.
The volatile online currency’s trajectory reveals how Bitcoin is now able to make $1,000 (£750) dollar gains that had taken months in the past in just hours.
Investment strategist at Coutts, Lilian Chovin, said: “Its sharp rise brought back memories of the dotcom bubble back at the turn of the century.”
Warning against the instability of the currency Ms Chovin said it is not based on any underlying fundamentals.
She said in The Telegraph: “Our view at Coutts is that, as an investment asset, electronic currencies like Bitcoin have nothing but sentiment backing them up.”
“We, therefore, have no current plans to include them in our investment strategy.”
Mr von Koskull said: “I haven’t got my head around it.
“When we look at all the financial crime and all the regulation, how does bitcoin fit in?”
Couts are not just fearful of a Bitcoin bursting, they have also voiced concerns that it may be part of a wider tech bubble.
Ms Chovin said: “Technology has been a significant outperformer this year in the US.
“It has risen by around 35 per cent in US dollar terms which is almost double the return from US equities.”
Bitcoin’s most recent success has been greeted by environmental concerns as the amount of energy used to “mine” the currency grows.
New coins are added to the economy via mining which is also how the digital ledger is maintained.
The amount of energy required for a single transaction uses the same amount of energy as a household can go through in nine days.
While the Bitcoin economy is maintained globally with the same energy used 159 individual countries, according to research from Digiconomist.
Climate expert Eric Holthaus said: “In just a few months from now, at bitcoin’s current growth rate, the electricity demanded by the cryptocurrency network will start to outstrip what’s available, requiring new energy-generating plants.
“And with the climate conscious racing to replace fossil fuel-base plants with renewable energy sources, new stress on the grid means more facilities using dirty technologies.
“By July 2019, the bitcoin network will require more electricity than the entire United States currently uses. By February 2020, it will use as much electricity as the entire world does today.”