Volatility in cryptocurrency to continue, says Allianz' Mohamed El-Erian

Allianz's chief economic adviser Mohamed A El-Erian expects the volatility in cryptocurrencies to continue despite the recent crash that wiped off more than $1 trillion in global crypto market capitalisation from peak to trough.

"I think the volatility will continue," El-Erian said in an interview to CNBC. "The roller coaster, the up and down. We’ve traded in the 30,000 to 44,000 price range in a week, that’s enormous."

On being asked whether he sees regulation in cryptocurrencies as a boon or a bane, the economist said it would be a negative for the decentralised digital assets as the governments were worried about illicit payments.

He added that governments had realised that they should be "in this game", citing China which recently banned financial institutions and payment companies from providing services related to cryptocurrency transactions.

"I think China is trying to make room for centralised digital currency, so you have to crowd out the private sector decentralised one and that is what they are trying to do," said El-Erian "So, I don't think the regulatory approach is going to be a facilitator of higher prices."

This is not the first time El-Erian has voiced concerns over regulatory intervention in cryptos. In February, he said the official sector was the biggest threat to bitcoin and the difference of opinion between the private and the official sector could lead to an "accident" in the digital token.

Bitcoin climbed back above $40,000 on May 26 for the first time this week. The premier cryptocurrency jumped as much as 6.5 percent to $40,904. Smaller coins, which tend to rise and fall with the largest cryptocurrency, also gained, with ether climbing over 7.5 percent to over $2,906.

Read: Top cryptocurrency prices today: Bitcoin, Dogecoin, Ethereum

Still, bitcoin is down 30 percent this month and has lost over 37 percent from its record high of around $65,000 hit in April. However, on a year-to-date basis, it is still up 40 percent.