Billionaire bond investor Jeffrey Gundlach called Bitcoin and cryptocurrencies are the "poster child" for speculation in a market with frothy valuations.

The increasingly hot sector has had a rough couple of days, after Elon Musk sent Bitcoin (BTC) reeling on Wednesday. In a surprise move, the billionaire founder of Tesla (TSLA) said the company would stop accepting the digital currency for car purchases, touching off a new bout of volatility in crypto.

According to Gundlach, the founder and CEO of $135 billion DoubleLine Capital, crypto units have become "objects of speculation, and had a lot to do, again with the government money."

The investor told Yahoo Finance in an interview that some investors "are just playing with this funny money. And when you give people money that don't need it, which, unfortunately, we've been doing a lot, they feel like they're playing with the house's money."

He added: "So it actually does resemble a casino to them psychologically."

'Speculative fever'

At the start of last year, the bond investor has previously been "really bullish" on Bitcoin, when it was trading at much lower levels.

However, "all of a sudden it blew right through $15,000, and all the sudden it was $23,000, and that's what I turned neutral on it, too early obviously because it's now double that. It was nearly triple that."

Gundlach added the big swings in the digital currency are "based upon speculative fever" punctuated by Musk's surprising U-turn this week.

"It's almost like every era of really highly valued markets — after they've run a lot — has some sort of a poster child if you will," Gundlach told Yahoo Finance. "It was like some of the crazy dot-coms that had no revenue that were coming to market very successfully in the year 1999. Here, it's I think it's really these cryptos."

Gundlach suggested that the peak in Bitcoin is maybe only temporary. "But when you're looking at a speculative fervor, I look for the poster child to roll over last," the investor added.

According to Gundlach, "another sign that some of the speculative fervor might be in the process of dissipating" can be found in the Nasdaq (^IXIC), which is underperforming the S&P 500 (^GSPC).

"And it has been for a while now…This year to date, excluding today, I didn't get the final prints, the Nasdaq was only up 2%. And the Dow Jones was up double-digit," Gundlach said, noting that for the longest time the NASDAQ's performance has been powered by what he's dubbed the "Super 6." That consists of Facebook (FB), Amazon (AMZN), Apple (AAPL), Alphabet (GOOGL), Netflix (NFLX), and Microsoft (MSFT).