Mohamed El-Erian, chief economist at Allianz’s asset-management arm, managed to profit from Bitcoin after the 2018 crypto winter, but sold the coins too early. He said this in an interview with CNBC.
According to the economist, he bought some Bitcoin in the 2018 crypto winter, when the price fell to nearly $3,000.
“I felt I had to buy it at that level — and I did. That was my entry point,” El-Erian said.
He held the position until the end of 2020 and sold the coins when Bitcoin returned to the $19,000 level. A few months later the price of digital gold surpassed $60,000.
The economist admitted that he misjudged when to sell the asset, due to “behavioral mistakes.”
El-Erian divides Bitcoin investors into three groups:
- fundamentalists who came to the industry for the long haul;
- professional investors seeking to diversify their portfolios;
- speculators engaged in day trading.
He said he would be ready to buy Bitcoin again, but only when part of the speculators leaves the market. In his view, in the long run the first two groups will become “a solid foundation for the market,” since they are interested in the technology.
The economist believes digital currencies are “a very disruptive force,” but are unlikely ever to replace the dollar.
“I think they will always exist in the ecosystem, but won’t become a global currency,” he said.
Given the systemic importance of cryptocurrencies, the economist urges industry players to take regulation seriously to avoid repeating the mistakes of Big Tech.
“The crypto community must take concerns about illegal payments, fraud and platform stability seriously,” he added.
As a reminder, in April, Mohamed El-Erian said that a hypothetical crash of Bitcoin should not negatively affect financial markets, but it would pose a challenge to the paradigm under which investors focus solely on liquidity.
Read ForkLog’s Bitcoin news in our Telegram — cryptocurrency news, prices and analysis.