When bitcoin hit an all-time high near $20,000 in December 2017, momentum was strong, and optimism ran wild. But noted investor Whitney Tilson called a top.

Tilson said he called bitcoin's top within the hour in December, disseminating his call to his more than 5,000 email list subscribers. "I said, 'That's it.' I've been skeptical of this thing for years, but I'm calling the top right now."

He told TheStreet that his reasoning was simple: Too many uneducated investors were pouring their money into bitcoin - mania had ensued. "Every once in a while," Tilson said, "I get the gut instinct that stupidity has reached a climax."

"That week, I got three or four calls or emails or conversations from friends of mine who were absolutely unsophisticated ... the proverbial shoe shine guy, right?" Tilson said. He heard from his tennis pro, his friend who runs a nonprofit for inner city kids and what he called the "clincher," his friend who trains Navy SEALs. That friend told Tilson that SEALs were returning from overseas and investing their $15,000 year-end deployment bonuses in bitcoin.

"It was the intensity combined with the least-sophisticated people," Tilson said, "and it reminded me of the only other time in my entire investing career that I had seen this kind of anecdotal burst in a bubble - at the very peak of the internet bubble."

Since it's peak, bitcoin has fallen to as low as near $6,000, a stunning nearly 70% price decline in the span of about two months. 

For what it's worth, Tilson is adamantly and openly bearish on bitcoin.

Whitney Tilson
Whitney Tilson

"Anyone who's been around for while can see, instantly see, that the cryptocurrency thing is just a well-orchestrated pump-and-dump, total scam, fueled by promoters and charlatans and some real hard-core disciple believers," Tilson said, "but they're of course blinded by the fact that they've just gotten rich on it."

Bitcoin, the largest cryptocurrency by market value, soared 1,318% last year. As far as Tilson is concerned, that price is about to shrink dramatically.

"All the 1,700 cryptocurrencies out there are valued at about, what, $350 billion? That will go down 80% from here," Tilson said.

He noted that those who say cryptocurrency will stay afloat by the virtue of its underlying blockchain technology aren't exactly right. Tilson said blockchain tech will undoubtedly change the world and the way we do business, but that doesn't mean cryptos are going to be worth anything a year from now.

"In the Internet bubble, the bet was, 'oh, the Internet is the future.' Well guess what, the internet was the future. But all the stocks went down 80% to 100%," Tilson said, comparing blockchain to the advent of the internet and bitcoin to the stocks that popped in 1999.

"That's what you have to understand. Every bubble is actually rooted in something that's actually a good idea or does represent the future," Tilson said.

For now, at least, bitcoin is still in the throes of a wild run. Though prices are well off highs, they have maintained steady gains in the past weeks. As the gains continue and the everyday investor toils away life savings, bonuses and retirement funds into a cryptocurrency that may not have a future, regulators have failed American people, Tilson submits.

"The regulators are completely asleep and will only be there to shut the barn door after the horse has fled," Tilson said. "And that's an absolute disgrace."