NEW YORK (Reuters) – Cryptocurrencies are here to stay despite a prolonged slump this year, and will gain wider acceptance after the recent entry of more institutional investors in the space, Mohamed El-Erian, chief economic adviser at Allianz, said on Tuesday.

At a CoinDesk conference called “Consensus: Invest in New York,” El-Erian said the participation of institutional investors in various crypto projects, even as retail investors have shied away because of price declines, was a positive sign.

“I think cryptocurrencies will exist, they will become more and more widespread, but they will be part of an ecosystem. They will not be dominant as some of the early adopters believed them to be,” El-Erian said.

He disclosed that he had opened a bitcoin account for $400, but only for the purpose of testing it.

El-Erian was positive about the outlook for crypto assets because of the growing interest from institutional investors.

“We are seeing a rotation going on – retail is becoming more reasonable if you like,” he said. “The exuberance is behind us, and institutions are starting to establish a foothold and that’s good long-term.”

The former PIMCO co-chief investment officer emphasized that cryptocurrencies are commodities, not currencies.

“They don’t have the intrinsic attributes of a currency. It is not going to replace money,” he added.

Virtual currencies have been in a steep downtrend since the beginning of the year amid increased regulatory scrutiny and amid some instances of hacks and thefts at crypto exchanges.

Bitcoin earlier this week fell to a 14-month low of $3,462.57 on Bitstamp, and was last up marginally at $3,682.10 BTC=BTSP. It has lost 74 percent of its value so far this year, after hitting nearly $20,000 in December last year.

El-Erian said the recent crypto meltdown was not surprising. The market is going through a cycle – that of overconsumption that took bitcoin to nearly $20,000 and overproduction that has resulted in the current sell-off, he added.

El-Erian said this is healthy for the market.

He admitted he was initially skeptical about bitcoin because it was first presented to him as a global currency, which was never really the case. But he has since changed his mind.

“I didn’t initially distinguish between cryptocurrency and the underlying technology. I treated it all as one,” El-Erian said. “As I evolved … I learned in the process.”

Blockchain, the technology that underpins digital currencies, is a digital ledger that provides a secure way of making and recording transactions.