El-Erian: I bought bitcoin at $5,000 and sold at $19,000, thinking ‘I was the smartest person around’

Just about everyone – from Ray Dalio to Lloyd Blankfein – has weighed in on the debate on whether cryptocurrencies should be regulated, invested in or consigned to the scrapheap of asset bubbles waiting to burst.

Yet few openly admit they closed their positions too early on cryptos like bitcoin, the world’s largest cryptocurrency. Bitcoin peaked at nearly $42,000 earlier this month and true to its volatile nature, fell to $33,000 on 25 January after its worst week since March 2020.

Refreshingly, Allianz’s chief economic adviser Mohamed El-Erian has made candid admissions on his crypto trading.

In an interview with the Centre for the Study of Financial Innovation, El-Erian said he always believed that cryptocurrencies belong in a payments ecosystem, and would “not become a global currency”.

When bitcoin hit the $19,000 mark, he was asked on a TV show whether he would invest.

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“I said, I would not buy until the price goes [down] to below $5,000.”

And then, the price did drop, at which point the world-famous economist invested in the crypto.

“I bought at $5,000 and then sold at $19,000 thinking that I was the smartest person around,” he said.

But he admitted he failed to consider a few key details about trading in the cryptocurrency.

“I had only looked at the technicals, at the overshoot. Little did I know that in the next four weeks, it would double in price at $38,000 and make me look like a complete idiot!”

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The economist, who rarely provides a view on cryptos, last said in 2018 that digital currencies were not dead despite the 2000 dot-com crash. He said at the time that he expected more widespread adoption – by those in the public and private sectors – of technologies related to blockchain.

“What [my trading] tells you is I don’t have a good understanding of Bitcoin other than at the extremes,” he added.

To contact the author of this story with feedback or news, email Penny Sukhraj

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