Mohamed A. El-Erian, a highly regarded economist and part-time chief economic adviser to Allianz, recently expressed his views on the dynamics of safe haven assets such as BTC in the context of global turmoil in an interview with CNBCs Market Alert .
El-Erian, who has a deep influence on the sector as the former CEO and co-chief investment officer of PIMCO, shared his insights into the changing perception of U.S. Treasuries in the market during the interview.
There are two big confusions that show how troubling the volatility in the U.S. Treasury debt is, El-Erian said. One, its not becoming a safe haven. Were not seeing the pursuit of quality and the desire for quality that we expected given whats going on in the world. The pursuit of safety.”
He went on to emphasize, “Secondly, counterintuitively,People talk about BTC and stocks being safe assets as confidence in Treasuries as safe assets is lost。”
The narrative comes against the backdrop of the recent Israel-Hamas conflict, during which the traditional safe-haven status of U.S. Treasuries appeared to be shaken.
El-Erians comments resonated with markets as the U.S. 10-year Treasury yield rose to 4.9%, signaling less demand for such government bonds.In stark contrast, BTC has surged over 20% since the conflict began。
Regarding the rise in 10-year yields in the wake of tensions in the Middle East, El-Erian said, Were not seeing the leap to quality or the leap to safety that we expected.
It’s worth noting that El-Erian used the term “qualitative leap,” which is the same term BlackRock CEO Larry Fink recently used when talking about BTC — whether this has any special meaning is debatable, But it at least got peoples attention.
This isn’t the first time El-Erian has talked about BTC and Crypto assets. In November 2021, he shared his adventure into the BTC space: “I felt like I had to buy it — I really did.”
El-Erian admitted to CNBC’s Dan Murphy that he decided to buy BTC when it dipped in 2018. However, the time was not right for him to exit the market.
Describing his views on the different types of BTC investors, El-Erian explained, “There are ‘fundamentalists’ who invest for the long term, professional investors looking to diversify their portfolios, and there are ‘speculators’ who day trade. ” He emphasized that once day-trading speculators are “dumped out,” he will feel more comfortable reentering the market.
At the end of October 2022, El-Erian acknowledged BTC’s disruptive potential. However, the economist has maintained that BTC will not replace the US dollar as the global currency:
“Let me be clear, I don’t think BTC will become a global currency and I don’t think mass adoption will happen when BTC gets to $200,000 or $300,000. But,Crypto assets can and should survive as part of the payments ecosystem and as an asset class。”
In September of this year, El-Erian recognized the maturation of the BTC and Crypto industries and noted its increasing institutionalization.
He commented on CNBCs Squawk Box show, The Crypto asset is stabilizing as part of the ecosystem. People have realized that it is not the new global currency, people have also realized that it is not going away tomorrow, it has been It’s institutionalized. If I’m a Crypto person, this maturation process is a good thing.”
