Allianz’s chief economic advisor predicts that the Fed's response to inflation will cause the price of crypto to 'go higher.' cryptocurrency bitcoin $BTC
Allianz Chief Economic Advisor Mohamed El-Erian says that the Federal Reserve’s response to inflation will cause the prices of cryptocurrencies, like bitcoin, to “go higher.” He noted: “That’s what you get when you’ve waited too long to recognize what inflation is and to take action.”Economist Mohamed El-Erian discussed the U.S. economy, the markets, and the Federal Reserve’s response to inflation in an interview with CNBC Monday.
Due to these factors, the economist said that companies are now having questions about growth. He noted that investment bankcame out Monday saying that there is a 35% probability of a recession in the next two years. “That’s a meaningful number, 35%,” El-Erian stressed. The economist explained: “There’s a reason why, and that’s because crypto, unlike gold, benefited enormously from all the liquidity injections. So what you’re getting in crypto is a tug of war between a recognition that liquidity is going out from the system as a whole and attractiveness as a diversifier. So far, it’s the liquidity element that is winning out.”What you are seeing across the board is the restoration of value, and that’s a good thing.
El-Erian reiterated: “So I view this as part of the restoration of value that we are seeing in quite a few assets, not all of them yet, but quite a few already.”El-Erian was also asked about what would force the Federal Reserve to change its inflation target and what that target would be.
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