Mohamed El-Erian is sure that a “moment of truth“ will come for bitcoin shortly. He is a chief economist of the most significant European asset management company Allianz.
The financier associates this with the correction that the first cryptocurrency tested recently after the launch of BTC futures.
According to El-Erian, now the crypto-currency market is at the “historical crossroads.” 2017 was a breakthrough for the industry, and the price of bitcoin increased from $ 1,000 to almost $ 20,000. After this event, a noticeable correction began. This situation is familiar for bitcoin (the average coin drops by 30% every two months). El-Erian noted that this was the most significant correction after the launch of BTC futures on US stock exchanges CBOE and CME Group.
What to Expect in The Future?
He said that this sharp correction can become a catalyst and will further stimulate the interest of institutional traders in the new market. At the same time, it can also become a stepping stone to blowing this historic and outstanding bubble.
In September, the former executive director of PIMCO called a “reasonable” price of $1,300-2,000 per one bitcoin (about a third of the real market at that time). He argues that the cryptocurrency hinges on a dedicated but limited investor base. The financier also noted that bitcoin attracted far less government attention and intervention than expected.
Financial analysts also said that the regulatory steps of the Chinese government would be a “fatal blow” for bitcoin. As practice showed, cryptocurrencies continued to grow in price and after all prohibitions in the Middle Kingdom.
El-Erian believes that a “healthy” correction will eliminate “irrational exuberance.” It will also provide institutional investors with an attractive “entry point” to the crypto-currency market.