Following the sharp fluctuations experienced in the cryptocurrency market this week, Bitcoin has made a strong recovery.
Ethereum also managed to regain the roughly 9% of its value it lost between Sunday and Monday. However, both assets remain well below the record highs seen a few months ago.
Mohamed El-Erian, Chief Economic Advisor at Allianz, stated that the main reason for this severe market volatility is “tourist investors.” According to El-Erian, the “established investor base” of long-term, institutional investors in the crypto market is still quite narrow. In contrast, the large and mobile group of speculative investors is causing prices to overreact, both up and down.
El-Erian described this structure as an “inverted pyramid,” noting that the crypto market’s underlying solid base remains small. He noted that long-term investors hold a greater weight in assets like gold, and therefore, corrections in gold remain more limited.
El-Erian expressed cautious optimism about the outlook for 2026. Citing his conversations with prominent figures in the crypto and blockchain space, the economist stated that the growing excitement around “real-world assets” (RWA) is a valid trend.
The expert predicts that both a wider and deeper area of use will emerge in the coming period.
However, El-Erian stated that he doesn’t expect crypto to become the “dominant global currency.” The economist acknowledged that crypto assets will be an important part of the ecosystem, but noted that high volatility will continue.
*This is not investment advice.
Source: https://en.bitcoinsistemi.com/why-does-the-bitcoin-btc-price-go-up-and-down-economist-mohamed-el-erian-explains/
