Mohamed El-Erian, chief economic advisor at Allianz, said in an that bitcoin would be a buy if the price fell under $5,000.
El-Erian is a leading authority on the economy at Allianz, which is one of world’s largest insurance firm and also one of the largest financial services group (based on a composite measure).
Past Criticisms and Analysis
Though not entirely an outright critic of bitcoin, El-Erian has commented often on the “bubble” nature of the asset. Back in September 2017, CCN on the economist’s comments that bitcoin was triple its true value.
As a traditional financial services authority, El-Erian stood out as having a more moderate opinion at that time in comparison to others. Jamie Dimon, CEO at JP Morgan, was calling bitcoin an outright “.” However, even JP Morgan is shifting their opinion on cryptocurrencies, as CCN on May 16 this year.
The ‘Healthy Correction’ May Be Happening Now
As CCN in December 2017, El-Erian believes that the sharp price decline in bitcoin was a defining moment. It would either end up as a healthy correction to shake out “irrational exuberance” and thus attract institutional investors. Or it would ultimately collapse and go down as the biggest asset bubble in history.
Now it seems that the economist has shown his hand. The “healthy correction” is nearing a point where even El-Erian believes that a buy-in is justified. The bubble hypothesis may not be on his mind after all.
He said that blockchain tech is here to stay. bitcoin, however, will become more a commodity than a currency, much like gold as a “store of value.” He believes that a base needs to be reached “whereby the people who really believe in the future of bitcoin consolidate and then that provides you a lift.”
So it seems that the current market environment is finding a base that is attracting El-Erain’s attention.
Putting it all in Perspective
In the high-speed world of cryptocurrencies, it’s easy to miss the speed that the positive shift has occurred with even the staunchest crypto critics in the financial services industry. Federal regulatory bodies and giant institutional investment firms are known for taking slow courses of action.
In less than a year, most of the recognizable brokerages and financial firms have done a 180 with their opinions and started joining the cryptocurrency movement. For instance, Fidelity Investments and are launching trading desks for cryptocurrencies.
Despite the current slump in bitcoin price, the correction appears to be improving sentiment among institutions that believed bitcoin’s price during the late 2017 run-up did not justify its value.
Featured image from Shutterstock.
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Published at Fri, 29 Jun 2018 16:47:12 +0000
bitcoin Opinion
