- Mohamed El-Erian, chief economic adviser at Allianz, a German multinational financial services company, has predicted a rise in Bitcoin as inflation continues to permeate.
- El-Erian assured that it is possible that inflation has not ended and that it may remain at high levels, similar to those of other times or less developed countries.
Inflation in the United States and in the rest of the world is one of the great current concerns in economic matters and some specialists consider that this devaluation of the US dollar could mean a positive impact for Bitcoin.
Unlike fiat money, digital gold will have a limit of 21 million BTC, which makes it precious, this, according to Mohamed El-Erian, who is chief economic advisor to Allianz, a German multinational financial services company, can be decisive in these momentsyes
BTC inflation and growth
In an interview with the CNBC network, the specialist gave details of his position and explained that the markets “they have understood that we have three problems”. This, as a consequence, generates doubts about the possible growth in the next cycles. What are the problems that the United States is going through?
- Inflation is high and persistent
- The Federal Reserve (Fed) is way behind
- The road to an orderly disinflation is quite narrow
The position of the Allianz adviser goes hand in hand with the statement by Goldman Sachs, which considers that there is a 35% chance of seeing a recession in the next two years. This generates fear in all markets, including digital assets, which at the moment are not behaving as expected during the crisis.
"I think the concern of the crypto crowd is that this decline is happening at a time when gold is rising and reaching almost $2,000. The big argument in favor of crypto is that it is a diversifier. In a time of inflation, it’s attractive”, he expressed.
However, the good news could come in the short term. When asked by the interviewer about what will happen to gold and cryptocurrencies, El-Erian did not hesitate: “In such a world, both rise”.
market predictions
The analyst, as published Bitcoin Magazinereferred to the current market price of bitcoin and other cryptocurrencies as a restoration of value, assuring that what is currently happening is good for the market.
"We are adjusting to a paradigm in which liquidity is no longer abundant. And it’s not predictable anymore"continued who has experience in the economic field.
While it is unclear when cryptocurrencies will rise, El-Erian believes that a bottom may not have been reached yet. The decline of Bitcoin and other digital assets could continue to be even deeper.
"We have to take seriously the fact that stagflation has become the baseline. Recession has become the risk scenario, that we are no longer close to the Goldilocks scenario. I would be cautious across the board."he highlighted.
Will inflation continue to rise?
El-Erian launched an alert message by assuring that it is possible that inflation has not ended and that it may remain at high levels, similar to those of other times or less developed countries.
The Joe Biden administration faces many challenges, and inflation is one of them. The economic team has been concerned about this and has resorted to a classic solution of printing more banknotes. That is proven to be just a patch.
The Allianz adviser does not believe in the Fed’s ability to reach the 2% inflation target in the next two years. He even proposed, in order not to lose credibility, that they should adjust the number. El-Erian does not see with bad eyes an adjustment to 3%.
"What will force them to change their objective is the recognition that by arriving so late they cannot reach that objective and their credibility is threatened”, he reflected.
In March, inflation in the United States reached 8.5%, which was a new record for the country in the last four decades. This is believed to have been caused by strong demand, supply chain disruptions and high energy costs as a result of Ukraine’s war with Russia.
This data, according to specialists, will serve for the Federal Reserve to announce a 0.5% increase in interest rates. In March, 0.25% was already approved, which was the first increase since the start of the Covid-19 pandemic.
In times of crisis, Bitcoin appears as a good alternative. Once again, in a globally chaotic 2022, it promises to rear its head and stand out in the world of financial assets.
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