Mohamed El-Erian: Bitcoin should be valued at half of what it's worth today

"The current prices assume massive adoption, which is not going to happen," the economist argues.
The Allianz advisor says bitcoin will exist as a peer-to-peer means of payment.
Bitcoin falls below $4,000 on the threat of a regulatory crackdown in China and negative comments from major business leaders.

Bitcoin, which has surged roughly 300 percent in 2017, is certainly a "disruptive" technology but won't see widespread use, economist Mohamed El-Erian said Wednesday.

"The current pricing assume massive adoption, and I don't think governments will allow the amount of adoption that's currently priced in," Allianz's chief economic advisor said on CNBC's "Squawk Box."

Asked what would be a reasonable price for bitcoin, El-Erian said: "I would say at least half of what it is, a third of what it is."

El-Erian believes the cryptocurrency will exist as a peer-to-peer means of payment. "It exists in that world," he said, "but the current prices assume massive adoption, which is not going to happen."

Bitcoin fell below $4,000 on Wednesday on the threat of a regulatory crackdown in China and negative comments from major business leaders.

On Tuesday, at the CNBC-Institutional Investor Delivering Alpha conference, JPMorgan chief Jamie Dimon called the digital currency a fraud and governments will step in. "Wait until someone gets hurt. Wait until it's used for illicit purposes, which it's somewhat used for illicit purposes. They close it down. That's my point," he said.

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