Bitcoin on the threshold of the "moment of truth"
The chief economist of the largest European asset management company Allianz, Mohamed El-Erian, is sure that in the near future a "moment of truth" will come for Bitcoin. The financier associates this with the correction that the first cryptocurrency tested recently after the launch of BTC futures. He expressed his point of view in the author's column on Bloomberg.
According to El-Erian, now the cryptocurrency market is at the "historical crossroads": 2017 was a breakthrough for the industry, and the price of Bitcoin increased from $1,000 to almost $20,000, after which a noticeable correction began. So, at the time of publication, the weighted average rate of BTC, according to Coinmarketcap, is about $14,450. It’s much lower the historical record of $20,089 on December 17.
Although such a situation is common for Bitcoin (usually the coin goes down by 30%), every two months) El-Erian noted that this was the biggest correction after the launch of BTC futures on US stock exchanges CBOE and CME Group.
El-Erian said:
“This sharp correction will either become a catalyst and will further stimulate the interest of institutional traders in the new market, or will become a stepping stone to blowing this historic and outstanding bubble.”
In September, the former executive director of PIMCO called a "reasonable" Bitcoin’s price $1,300-2,000 (about a third part of the real market price at that time), arguing that the cryptocurrency is held on a dedicated but limited number of investors. The financier also noted that Bitcoin attracted far less government attention and intervention than expected.
Financial analysts also said that the regulatory measures of the Chinese government would be a "mortal blow" for Bitcoin. As practice showed, cryptocurrencies continued to grow in price and after all prohibitions in the Middle Kingdom.
El-Erian believes that a "healthy" correction will eliminate "irrational exuberance", and will also provide institutional investors with an attractive "entry point" to the cryptocurrency market.
Based on materials: Bloomberg.
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