Mohamed El-Erian, chief economic adviser at German multinational financial services company Allianz, said that Bitcoin is "not too big to fail"—and if it does, it could disrupt the global monetary system.
"From a narrow perspective, it’s not too big to fail; from a broader perspective, that would be another challenge to the liquidity paradigm, where investors simply bet on liquidity," El-Erian told CNN earlier this week, adding, "We’ve already had three near-accidents, so you’ve got to be careful, you never know which little fender bender is going to cause a pile up on the highway."
#Bitcoin: "From a narrow perspective, it's not too big to fail. From a broader perspective, that would be another challenge for the liquidity paradigm."@elerianm talks using $BTC to mitigate risk, investors viewing it as the "least bad asset" and market distortion. pic.twitter.com/2Mn3vorL62
In addition, El-Erian suggested that private sector adoption of Bitcoin will continue, but he issued a word of warning about the future role of governments allowing Bitcoin to thrive.
"This is an asset that wants to establish itself, but it can only establish itself if governments allow it to," he said, adding, "Be cautious, because not only are you assuming on private sector adoption, but you’re also assuming on government tolerance, and that second one, I’m not so sure about."
Bitcoin and central banks
Earlier this year, El-Erian said that Bitcoin "captures three things," or three types of investors—all of which should concern central banks.
The first are those investors that “truly believe Bitcoin will become money,” El-Erian said, adding, “If you’re a central bank and you have a monopoly over money, that’s not very reassuring at all.”
Second are those that could be described as negative investors. “They’re being pushed out of everything else and pushed into Bitcoin. It’s like being pushed into a marriage,” El-Erian said, adding, “Why are they doing that? Because they don’t know how else to mitigate risk.”
The last investor type is the traditional pure speculator. Those that make a bet on Bitcoin in the hope of larger profits down the road. “Where else do you get 20% returns or losses in a single day?” he said.
Mohamed El-Erian, chief economic adviser at Allianz and former CEO of Pimco, says the current Bitcoin bull run "captures three things"—in his framing, three types of investors—that central banks should be concerned about right now.
El-Erian, who is also the president of Queens' College, Cambridge, and a board member of Under Armour, made the comments in response to a question on Wednesday at a seminar for business journalists held by the University of Pennsylvania's Wharton School, where he is a...
All of these investors—according to El-Erian—should concern central banks. “When it’s trading above $50,000, all three messages are problematic for central banks,” he said, adding, “So, we are going to see central banks look increasingly at cryptocurrencies as something they should be involved in, and not just stand on the sidelines.”
Grayscale has challenged the U.S. Security and Exchange Commission’s move to pause the debut of its exchange-traded fund that holds Bitcoin, Ethereum, Solana, XRP, and Cardano, alleging its investors are “suffering harm” as a result of the hold-up.
In a letter dated July 8, the asset manager urged the Securities Commission to allow its Digital Large Cap Fund to begin trading.
Grayscale added that it may file a petition to force the regulator to allow its fund to begin trading as soon as possib...
SharpLink Gaming shares rose on Friday after the largest publicly traded Ethereum treasury firm said that it had acquired $30 million worth of Ethereum from the Ethereum Foundation.
SharpLink’s stock was changing hands around $20 per share, a 71% gain over the past week, according to Yahoo Finance. The performance coincides with Ethereum’s climb above $3,000 for the first time in five months, a 17% gain, according to crypto data provider CoinGecko.
The non-profit organization that funds research...
Stablecoin platform Agora has raised $50 million in a Series A round led by Paradigm, with additional backing from Dragonfly Capital, as it seeks to capitalize on growing interest in the potentially lucrative sector.
The funding will support the expansion of Agora’s all-in-one system for issuing and managing stablecoins, as well as the introduction of its new white-labeled stablecoin product, the company announced Thursday.
The raise comes as the U.S. Congress is considering stablecoin legislati...