Carlos Barria/Reuters

According to regulator Joseph Borg, the bubble’s going to burst.

When Joseph Borg opened his email on Monday morning, he found three new messages, all fervently advertising the same thing: bitcoin.

“Earn a Guaranteed $13,000 In Exactly 24 Hours!”

“Click here for bitcoin purchase!”

Borg is the president of the North American Securities Administrators Association, or NASAA, a consortium of state securities regulators involved in investor protection. He’s alarmed, but not surprised, at the level of hysteria that bitcoin has inspired lately. Since January, when the price of a single bitcoin sat at $1,000, the value of the digital cryptocurrency has ballooned dramatically, briefly leaping to $19,000 on Coinbase this week, up from $16,000 last week. And as the bitcoin bubble has inflated, the superheated emails have proliferated, all bearing the same basic message, Borg says: “‘We’re going to make a lot of money—do it now!’”  

Later that day, Borg, who focuses on consumer protection in Alabama, went on cable news to warn potential buyers about heeding these come-ons. He often talks to people about their investment decisions at conferences, and lately he’s been fielding a lot of questions from bitcoin investors. To enter the booming market quickly, Borg says, he’s seeing people taking big financial risks,  similar to those that preceded the housing crash of 2008. Some tell him that they’ve begun taking out second mortgages on their homes to buy bitcoin.

“Most of them are taking out second mortgage lines of credit, which means they operate like credit cards,” he said. Homeowners can borrow up to around 80 percent of their mortgage, depending on the value of the home and their credit score, paying back that loan at an average interest rate of about 5 percent. But if they default, banks could foreclose on their homes. Borg estimates that most buyers he talks to are spending anywhere from $5,000 to $20,000 on the cryptocurrency.

“It’s not the first time mania such as bitcoin has reached out and touched folks to the point where they’re like ‘I gotta get in, I gotta get in—let me go tap my line of credit in my bank,’” said Borg. “It’s the same thing that got people in trouble in ’06 and ’07.”

Borg sees a similar kind of investor getting into bitcoin now—“folks who have pretty good education, some assets, who know they probably should be doing better than they are on saving for retirement.” They earn more than $60,000 a year, and have at least an adequate handle on technology. “If you think about it, the psychology is the same [as in 2006-2007] except that this one is much quicker, the duration is faster, and the leverage is higher,” said Borg. “But it’s the same story, just compressed: instead of a year, it’s three days.”

Unlike the real estate bubble and its subsequent bust, bitcoin speculation is built on a less robust foundation. “The problem is people are investing in something with no substance,” said Borg. “With bitcoin, I can’t tell them there’s anything there. It’s a line of computer code; it’s only as good as somebody’s willing to pay for.”

Gung-ho crypto buyers might argue that plenty of investments are equally speculative. Even a tangible good is only worth what the market says it’s worth. But many financial experts have lined up to join the chorus of bitcoin disapproval: Nobel Prize-winning economist Joseph Stiglitz said bitcoin should be “outlawed,”JP Morgan Chase CEO Jamie Dimon called the currency a “fraud,” and Vanguard Group founder Jack Bogle warned investors to “avoid it like the plague.”

Next month, another cryptocurrency, like Ethereum, could overtake bitcoin in popularity, said Borg. In a matter of hours, your digital fortune could become worthless. (Or double in value!) That’s why investing in bitcoin is so dangerous, and so alluring. “Nobody really understands it; nobody knows how it works. Some people still think they’re those coins you see on the graphics,” said Borg. “All they know is, they’re being inundated with emails. They get frenzied about it.”

Those who invested last year—or even last month—and are pulling out now rode the wave best, says Borg. And for those with enough means, financial advisors don’t object to letting clients play around high-risk investments like bitcoin, as long as they only use a small fraction of their wealth. Borg is most worried about those middle-income investors who are entering the market now, while it’s already so inflated, and taking out $20,000 on their homes—or betting on bitcoin as a retirement fix.

When Borg got off the air that afternoon, he checked his email again. Another message had arrived: “Bitcoin surges past $18,000 and is growing rapidly! It’s no secret, bitcoin is one of those unicorns you only see once!”

In the history of finance, however, the bitcoin craze is not really so unique. Crypto-critics inevitably cite the Dutch tulip-mania of 1637. More recently, when gas was $4 a gallon for the first time in 2008, people borrowed to invest in oil and gas wells, and got burned when fuel prices crashed. Like those earlier bubbles, Borg says, the bitcoin one is doomed to burst. The good news is that, unlike the housing crisis, the volume of bitcoin investments hasn’t reached a critical enough mass for a crash to cause a major financial meltdown, says Borg.

“There are folks who have drank the Kool-Aid or believed the hype, and there will be individual sad tales,” he said. “If you happen to be making $80,000 a year and you have a mortgage, I don’t think you ought to be borrowing on your house for a risk like this.”

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