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Edited by Kamal531 at 22-12-2023 02:04 PM
Economist: Bitcoin is not a new global currency, but it has the potential to become a "safe-haven asset."
Renowned economist and part-time Chief Economic Advisor at Allianz, Mohamed A. El-Erian, recently shared his views on the dynamics of "safe-haven assets" like BTC in the context of global turbulence during an interview with CNBC's Market Alert.
El-Erian, who formerly served as the CEO and Co-Chief Investment Officer of PIMCO, is influential in the field and offered insights into the changing perception of U.S. Treasury bonds in the market during the interview.
He stated, "Two puzzles show how unsettling the volatility of U.S. Treasuries is. Firstly, it hasn't become a safe haven. Considering what's happening in the world, we haven't seen the pursuit of quality and safety that one would expect."
He went on to emphasize, "The second puzzle is that, counterintuitively, people talk about BTC and stocks as 'safe assets' because people have lost confidence in government bonds as safe assets."
This statement comes in the backdrop of the recent Israel-Hamas conflict, during which the traditional safe-haven status of U.S. Treasury bonds appeared to be somewhat undermined.
El-Erian's comments resonated in the market as the yield on the U.S. 10-year Treasury bonds rose to 4.9%, indicating reduced demand for these government bonds. In stark contrast, BTC has surged over 20% since the outbreak of the conflict.
Regarding the rise in 10-year yields following the Middle East tensions, El-Erian said, "We haven't seen the expected leap in quality or safety."
It's worth noting that El-Erian used the term "leap in quality, which is similar to the language used by BlackRock CEO Larry Fink when discussing BTC recently, and whether this holds any special meaning is subject to interpretation, but it has garnered attention.
This is not the first time El-Erian has discussed BTC and crypto assets. In November 2021, he shared his adventurous entry into the BTC space: "I felt I had to buy it – I really did."
El-Erian confessed to CNBC's Dan Murphy that he decided to buy BTC when it was falling in 2018. However, the timing of his exit from the market wasn't opportune.
Describing his view of different types of BTC investors, El-Erian explained, "There are hardcore believers in long-term investment, professional investors who want to diversify their portfolios, and speculators who day trade. Once the day traders get shaken out, I would be more comfortable going back in."
At the end of October 2022, El-Erian acknowledged the disruptive potential of BTC. However, the economist has consistently maintained that BTC will not replace the U.S. dollar as a global currency:
I want to be clear that I don't think BTC will become a global currency, and I don't think it will see widespread adoption when it rises to $200,000 or $300,000. However, crypto assets as part of the payment ecosystem and as an asset class can and should survive.
In September of this year, El-Erian recognized the maturity of the BTC and crypto industry, noting its increasing institutionalization.
During an appearance on CNBC's "Squawk Box," he commented, "Crypto assets are stabilizing as part of the ecosystem. People have recognized it's not a new global currency, and they're aware it won't disappear tomorrow; it's been institutionalized. If I were in the crypto community, this maturation process is a good thing. |
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Post time 7-11-2023 12:48:03