Bitcoin Gaining Ground as a Safe Asset
In a recent interview, economist Mohamed A. El-Erian discussed the changing dynamics of safe-haven assets like Bitcoin in the face of global turmoil. El-Erian noted that US Treasuries, traditionally seen as safe assets, have not performed as expected in recent times. Instead, alternative assets like Bitcoin and equities are being perceived as safe havens due to the loss of confidence in government bonds.
The recent Israel-Hamas conflict further highlighted this shift. While US Treasury bonds faltered, Bitcoin surged more than 20%. El-Erian emphasized that the expected flight to quality or safety did not occur despite the tensions in the world.
El-Erian’s Bitcoin Journey
This is not El-Erian’s first time commenting on Bitcoin and crypto. In 2018, he bought Bitcoin near its $3,000 dip but sold too early in late 2020. He expressed his view on different types of Bitcoin investors, including fundamentalists, professional investors, and day-trading speculators. El-Erian stated that he would be more comfortable reentering the market once the day traders are shaken out.
While recognizing Bitcoin’s disruptive potential, El-Erian does not believe it will become a global currency to replace the US dollar. However, he sees its survival as part of the payments ecosystem and as an asset class.
The Maturation of Bitcoin and Crypto
El-Erian has also acknowledged the maturation of the Bitcoin and crypto industry. He believes that crypto has settled as part of the ecosystem and has been institutionalized. This recognition has brought stability to the market and is seen as a positive development by El-Erian.
Currently, BTC is trading at $35,072.
Hot Take: Bitcoin’s Emergence as a Safe Asset
Amidst global turmoil and the faltering performance of traditional safe-haven assets, such as US Treasuries, Bitcoin is gaining ground as a perceived safe asset. This shift in perception is driven by the loss of confidence in government bonds and the growing recognition of Bitcoin’s potential as a store of value.
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