Despite the bearish cryptocurrency market, many crypto bulls are predicting that Bitcoin, in particular, would stay stable and emerge victoriously. Although one mainstream economist doesn’t carry the same sentiment, the chief economic advisor of Allianz, Mohamad El-Erian expressed in an interview that cryptocurrencies are over-valued.
In an interview with Yahoo Finance, El-Erian explains that cryptocurrencies are not dead, though they might be overvalued. He adds that the previous bullish action was due unnecessary speculations which led to an unwarranted buying frenzy. El-Erian repeats his statement from the June interview, where he specifically mentioned bitcoin as an asset whose buy value should be circa $5,000. He states in his latest interview:
“What we’re getting is the realization that adoption is not going to be as big and as quick as the proponents of crypto would like. I think it’s going to be there, it’s going to last for a long time, it’s going to play a role in the ecosystem, but it’s not going to be the currency that a lot of proponents would like it to be.”
The cryptocurrency market is undergoing a robust bearish correction and the industry’s capitalization has dropped by 80 percent since its all-time high this year. All the top coins are bearing the brunt of the fall. For now, all hopes and eyes are concentrated at bitcoin’s price, which is at its yearly low around $5,800, notably just $800 above El-Erian’s expectations.
What others have to say about Bitcoin’s downtrend.
Most of the financial experts predict that bitcoin’s downtrend is far from over, there is the possibility of the value further declining, even lower than El-Erian expects.
In June, the founder of London Fintech Week, Luis Carranza said that Bitcoin could hit its bottom near $2,500 in 2018. He told Express UK:
“$4,500 could be the bottom, but nothing is preventing $2,500 from being the bottom.”
A cryptocurrency skeptic and an American economist, Nouriel Roubini, who predicted the 2008’s stock market crash, said that bitcoin’s value could eventually drop “all the way down to zero.” Roubini even dejected Ethereum smart contracts as the tools that can only govern “kangaroo courts.”
Neil Welson, an analyst at ETX Capital, told the Guardian during the previous bottom formation that bitcoin will fall further:
“Selling pressure at the moment is intense as there has been nothing but bad news for bitcoin bulls of late. Trying to catch the falling knife is a risky game.”
While these economists stick to their bearish stands, there are some bulls that support bitcoin with endless optimism.
Jürgen von Hagen of the Universität Bonn believes the success of any decentralized asset is proportional to the limitations of conventional currencies.
”Cryptocurrencies would become attractive if central bank issued currencies became very unstable. Their widespread use in the financial system would be a result, not a cause, of instability.”
Founder and CEO of Digital Currency Group, Barry Silbert, believed that cryptocurrency could not go any lower when bitcoin established its bottom in June
“As an asset class, it is here to stay… I’m 100% confident a decentralized, non-fiat form of money is here to stay.”
There is no denying that the Crypto market has divided into three groups: one who is bullish about it, especially bitcoin; one who is losing hope and expect the situation to worsen some more and the third who stand in between the two deciding which side to lean on.