- Mohamed A. El-Erian thinks Bitcoin is becoming the “Flight to Safety.”
- Bitcoin is becoming the “Flight to Safety,” says chief economic advisor of Allianz
- According to EL-Erian, the U.S. Treasury has never functioned as a safe haven.
Bitcoin is becoming the “Flight to Safety,” according to Mohamed A. El-Erian, Allianz chief economic advisor and former CEO of PIMCO. El-Erian said in a recent CNBC interview that Bitcoin is replacing the Long U.S. Treasury, which has always been seen as the flight to safety or quality.
During the interview, the CNBC presenter asked El-Erian if the U.S. Treasury will continue to play the role of a safe haven for investors, considering ongoing geopolitical developments around the globe.
The economic advisor responded by acknowledging that while the U.S. Treasury could still function in that role, things may change in the future. According to him, before the conflict started in the Middle East, the 10-year Treasury was at 480. That figure has risen to 497 in the past few weeks, with the risk of escalation of that crisis still intact.
He further cited two significant “puzzles” that speak about how uncertain the volatility in the U.S. Treasury has been. He noted the first puzzle to be that the U.S. Treasury has never functioned as a safe haven, and no one has seen the expected “flight to safety” given what is happening in the world. The Professor considered the second puzzle to be the increasing talk about Bitcoin becoming a “safe asset.”
In his explanation, El-Erian noted that many people have lost confidence in government bonds being a safe asset. According to him, their loss of confidence is influenced by the nature of the interest rate risks. He further added, “So yes, it should be the safe haven, it should have already benefited. But the reality is that the 10-year yield today is a good 70 basis points higher than it was before this latest conflict erupted.”
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
