It is not terribly common for a mainstream economist to say something good about bitcoin in the period of its downtrend, but Mohamad El-Erian once again made an exception.
Cryptocurrency’s Not Going Away
The Allianz chief economic advisor said in an interview that cryptocurrencies are not dead, though they may be overvalued. He specifically mentioned bitcoin as an asset whose buy value should be circa $5,000, a sentiment he had already shared in June. In his latest statements, El-Erian added that unnecessary speculations had led to the previous bullish action, causing an unwarranted buying frenzy.
He told Yahoo Finance:
“What we’re getting is the realization that adoption is not going to be as big and as quick as the proponents of crypto would like. I think it’s going to be there, it’s going to last for a long time, it’s going to play a role in the ecosystem, but it’s not going to be the currency that a lot of proponents would like it to be.”
The statement arrived at the time when the cryptocurrency market as a whole is undergoing a robust bearish correction. The industry’s capitalization has dropped by as much as 80 percent since its all-time high this year. All the top coins, including bitcoin (BTC), ripple (XRP), ethereum (ETH), and stellar (XLM), have contributed to the overall loss. All eyes are now on the bitcoin price’s yearly low around $5,800 — just $800 above El-Erian’s expectations.
Who Said What during Bitcoin’s Downtrend
Other notable financial experts have feared bitcoin’s downtrend is far from over and its value could even go lower than what El-Rian expects.
Luis Carranza, the founder of London Fintech Week, in June, had said that bitcoin could likely establish its bottom near $2,500 in 2018.
“$4,500 could be the bottom, but nothing is preventing $2,500 from being the bottom,” he had told Express UK.
Nouriel Roubini, the American economist and vociferous cryptocurrency skeptic who predicted the 2008’s stock market crash, has said that bitcoin’s value could eventually drop “all the way down to zero.” He even criticized ethereum smart contracts for being the tools that can only govern “kangaroo courts.”
Neil Welson, an analyst at ETX Capital, had said during the previous bottom formation that bitcoin will be derailed soon as soon as regulatory crunch appears closer.
“Selling pressure at the moment is intense as there has been nothing but bad news for bitcoin bulls of late. Trying to catch the falling knife is a risky game,” he told the Guardian.
At the same time, there are plenty of finance professionals that have come out in support of bitcoin’s short-term prospects.
Jürgen von Hagen of the Universität Bonn believes the success of any decentralized asset is proportional to the limitations of conventional currencies.
”Cryptocurrencies would become attractive if central bank issued currencies became very unstable. Their widespread use in the financial system would be a result, not a cause, of instability.”
Barry Silbert, founder, and CEO of Digital Currency Group, a venture capital firm, said after bitcoin established its bottom in June that the cryptocurrency could not go any lower.
“As an asset class, it is here to stay… I’m 100% confident a decentralized, non-fiat form of money is here to stay,” he said.
Featured Image from World Economic Forum/Flickr