Mohamed A. El-Erian, the chief economist at Allianz, said the Bitcoin price surging to a new all-time high at $38,000 could fuel an “interesting conversation.”
El-Erian’s comment comes after the U.S. Capitol in Washington, D.C. was stormed on January 7. 52 people were arrested and multiple fatalities were recorded, according to reports.
Following the event, President Donald Trump’s Twitter and Facebook accounts were locked. President Trump was requested to delete two tweets that violated Twitter’s guidelines to have the account unlocked after 12 hours.
Is Bitcoin surging due to institutional stress?
El-Erian explained that the surge in the Bitcoin price would fuel an interesting conversation on whether BTC is rising due to signs of divisions in the U.S.
Bitcoin is becoming increasingly considered as a safe-haven asset and a store of value, potentially as an alternative to gold.
Hence, when there is significant uncertainty in the market and society, it could serve as a catalyst for Bitcoin.
The Bitcoin price rallied strongly shortly after the controversial event in the U.S. El-Erian noted:
“Good morning. Among notable market moves this morning, #Bitcoin is up another 6%, #trading above $38,000. This will fuel an interesting ongoing conversation as to whether yesterday’s events will serve as a catalyst for healing or signal further divisions and institutional stress.”
If so, why did BTC react so strongly?
The controversy in the U.S. has garnered significant attention from world leaders.
New Zealand’s prime minister Jacida Ardern, for instance, said what is happening in the U.S. is “wrong.” She wrote:
“Like so many others, I’ve been watching what’s happening in the United States. I share the sentiment of friends in the US – what is happening is wrong. Democracy – the right of people to exercise a vote, have their voice heard and then have that decision upheld peacefully should never be undone by a mob. Our thoughts are with everyone who is as devastated as we are by the events of today. I have no doubt democracy will prevail.”
Other world leaders, like Germany’s chancellor Angela Merkle, also denounced the actions of President Trump.
The unprecedented media coverage around the event and the rising uncertainty around the presidency likely caused the demand for gold and Bitcoin to increase.
Amid times of turbulence and uncertainty, Bitcoin has historically performed well, with the exception of the March crash.
The daily Bitcoin price chart. Source: BTCUSD on TradingView, Peter Brandt
In the foreseeable future, technical analysts say BTC would likely continue seeing a parabolic rally. Long-time trader Peter Brandt said:
“Bitcoin $BTC is redefining the concept of ‘overbought.’ Bull markets become and remain overbought. Major bull markets become overbought majorly. Historic bull markets become historically overbought. Red arrows mark midpoints of parabolic advances”
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Title: Why Allianz chief economist says Bitcoin surging will fuel an “interesting conversation”
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Published Date: Thu, 07 Jan 2021 16:31:14 +0000
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