Mohamed El-Erian, chief economic adviser at financial services firm Allianz, says bitcoin will not be a global currency and will not replace the US dollar. However, he believes cryptocurrency will still exist in the ecosystem and will not be regulated.
Bitcoin will not become a global currency rivaling the US dollar, says economist El-Erian
Renowned economist Mohamed El-Erian spoke about the future prospects for cryptocurrencies, particularly bitcoin, in an interview with CNBC on Monday.
El-Erian is the chief economic adviser at Allianz, the parent company of PIMCO, one of the largest investment managers, where he was CEO and co-chief investment officer. The Egyptian-American businessman is also president of Queens College at Cambridge University.
While El-Erian thinks bitcoin is a “very disruptive force,” he doesn’t think it will ever become a “world currency” rivaling the US dollar. He said:
I think it will always exist in the ecosystem but it will not be a global currency… It will not replace the dollar.
However, he also doesn’t think bitcoin can be “regulated out of existence.”
El-Erian also revealed that he bought bitcoin during the “crypto winter” of 2018, when the price of BTC plunged to nearly $ 3,000, but did not say how much he bought. “I felt compelled to buy it – I really did… I felt like I framed it. I had this level, I had an entry point, ”he explained.
The economic adviser held his position as BTC until the end of 2020, when bitcoin regained the $ 19,000 level. However, he admitted that he misjudged when to sell due to “misconduct”.
He classified bitcoin investors into three types. The first is that of the “fundamentalists”, who invest for the long term. The second are professional investors, who are looking to diversify their portfolios, and the last is day trading “speculators”.
He explained that the first two types of investors are “a really solid foundation for this long-term market”. However, he noted that he would not feel comfortable buying bitcoin again until some of the market speculators were “shaken”.
He urges the crypto industry to engage with regulators as soon as possible, as crypto becomes more mainstream. He said it would help avoid regulatory hurdles faced by internet giants like Amazon, Google and Facebook. “When I talk to people in the crypto industry, I say you have a responsibility not to repeat Big Tech’s mistake. Big Tech’s big mistake was that they didn’t realize that they were becoming systemically important, so they did not engage in preventive regulatory discussions, ”he detailed.
In addition, Allianz’s economic advisor warned:
Crypto needs to take concerns about bribes seriously. There are concerns about fraud. There are concerns about the stability of the platform.
In August, El-Erian said, “The time has come for more Western governments to stop dismissing the crypto revolution as a mixture of illicit payment systems and reckless financial speculation. He added, “I tend to tell people, be very careful. It is an asset that wants to win, but it can only win if governments allow it.
Do you agree with Allianz’s bitcoin economist? Let us know in the comments section below.
Image credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. This is not a direct offer or the solicitation of an offer to buy or sell, nor a recommendation or endorsement of any product, service or business. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or allegedly caused by or in connection with the use of or reliance on any content, good or service mentioned in this article.