Morgan Stanley analyst thinks bitcoin 'could be valued at zero'

Bitcoin can’t be considered a 'real currency' like the U.S. dollar, because the cryptocurrency doesn’t have an interest rate associated with it, i.e. it has no cash flow, Faucette said.

"Since it's not like a currency, there is no interest rate associated with Bitcoin. It can be attributed to having features like digital gold. Bitcoin doesn't have any intrinsic use like gold has in electronics or jewellery, but investors appear to be ascribing some value to it," he added.

In the report, Faucette opined that Bitcoin's price is largely driven by the supply and demand for the digital currency, the same way in which investor attribute a high value to gold which makes it a worthwhile investment option.

The analyst emphasised the fact that only a few online retailers accept bitcoin, and that the number of retailers that do accept it is shrinking. "If nobody accepts the technology for payment then the value would be zero," Faucette said in his analysis.

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In an earlier report in July 2017, Faucette had pointed out how "the bitcoin ecosystem was focused more on value speculation rather than the foot leather-eating work of increasing acceptance."

While five online merchants out of the top 500 tracked by e-commerce analytics site Internet Retailer accepted Bitcoin in 2016, that figure has now shrunk to three. A part of the problem might be that the Bitcoin owners are reluctant to use the cryptocurrency given its rate of appreciation.  Bitcoin has been on a winning streak for the majority of this year.

Further, with high prices and volatility, transaction costs on the network have gone through the roof, making the digital currency increasingly uncompetitive as a mode of transaction.

Faucette is not alone in being pessimistic about bitcoin.

In September 2017, JP Morgan CEO James Dimon claimed that he would fire any trader who was found to be trading in Bitcoin.

Several central banks, including US' Federal Reserve and India's Reserve Bank of India, have warned investors against indulging in speculation on the price of bitcoin.