The recent surge in the price of Bitcoin has shown the level and speed of its adoption. Despite various hurdles and obstacles fighting the cryptocurrency’s growth, more individuals and corporations keep streaming into the community, with more to come.
Mirroring this thought, Mohamed El-Erian, president of Queens’ College, Cambridge mentioned in an interview on CNN that more companies will buy bitcoin to “mitigate risks”.
When queried if other companies will follow Tesla’s footstep and invest in Bitcoin, he replied, “ “I think you will see more companies do that because they don’t know how else to mitigate risks, so it’s part of the distortion of the financial markets that we are seeing more generally.”
The instability of the financial market drives more and more people into cryptocurrency as they scramble for a hedge to the rising inflation. El-erian, who is also a chief economic adviser at Allianz, the corporate parent of PIMCO where he formerly served as CEO and co-chief investment officer, also mentioned some inflation causes.
“Investors are chasing what someone labelled the rational bubble. Investors know that assets prices are very high, but there is reason to believe they will go even higher.’
He continued, “Why, because, in addition to massive Central bank liquidity injection, there are real prospects of massive fiscal injection on top. So basically, the investors feel confident with what is a massive historical liquidity wave.”
Talking about some of the risks and fears that bitcoin holders face, the Egyptian-American businessman revealed that adopting the cryptocurrency is not a problem for people but the official sector’s reaction.
As he mentioned, the reason is that the “private sector is embracing more and more bitcoin as both a form of payment and as a way to invest”. In contrast, the official sector keeps warning against it, and people are probably wary of the actions the governments might take against the cryptocurrency.
However, while central banks and governments are against cryptocurrencies, Bank of New York Mellon Corp. (BNY Mellon), the largest custodian bank globally, has shown interest and plans to hold, and transact crypto for its clients.
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