• El-Erian noted the changing landscape of digital assets and the increasingly prevalent role of institutions
  • Corporate interest for bitcoin continues to climb

Tesla’s bitcoin endorsement cements the digital asset’s status as a currency and investment vehicle, Allianz Chief Economic Advisor Mohamed El-Erian said during a CNBC interview Monday. 

The U.S. electric car manufacturer purchased $1.5 billion of bitcoin and plans to accept the digital currency as a payment method in the near future, according to a filing submitted to the Securities and Exchange Commission Monday. 

“This will be a form of payment and this is an investment vehicle,” said El-Erian. “Those are two powerful endorsements for the notion that bitcoin is a currency.” 

El-Erian said he bought bitcoin back in 2018 when the price was around $5,000. At the time he said he believed there would be greater crypto adaptation, but he wasn’t sure how high it could go. El-Erian later sold his bitcoin holdings at around $19,000 in 2020, and he admitted that he failed to look past the technicals. Four weeks after hitting $19,000, the largest digital currency rallied to $38,000. 

The sentiment around digital assets is changing, El-Erian said. Crypto-enthusiasts used to view bitcoin as an alternative to traditional financial instruments, whereas today institutional players have helped bring the asset class into the mainstream. 

“It used to be a negative argument. You don’t trust the system? Invest in bitcoin,” said El-Erian. “Tesla says there are positive reasons; form of payment and investment vehicle. That is a pivot and that is why you are seeing bitcoin prices at $44,000.”

Tesla’s announcement comes as more companies begin to express interest in adding bitcoin to their balance sheets, something that not long ago was seen as irresponsible. 

Business intelligence firm MicroStrategy hosted a conference about corporate digital asset exposure last week. Nearly 7,000 different enterprises had representatives attend the event. 

“Cash is now a liability, no longer an asset,” said Ross Stevens, president and CEO of Stone Ridge Asset Management, during an interview with MicroStrategy co-founder Michael Saylor. “Our reserves are now in bitcoin. Other than what we keep for salaries, rent, and things, our liquid reserves are in bitcoin.” 

Genesis, a subsidiary of Digital Currency Group, launched a service to help corporate treasury departments navigate the world of digital assets, including tax and legal solutions. Genesis created the product because they were getting so many calls from companies asking how they could best gain exposure to bitcoin, CEO Michael Moro said.

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    Senior Reporter
    Casey Wagner is a New York-based business journalist covering regulation, legislation, digital asset investment firms, market structure, central banks and governments, and CBDCs. Prior to joining Blockworks, she reported on markets at Bloomberg News. She graduated from the University of Virginia with a degree in Media Studies. Contact Casey via email at [email protected]