The stock market has been rising because too much money is chasing too few opportunities, economist Mohamed El-Erian told CNBC on Wednesday.

The Trump trade — betting on stocks in hopes that the president's policies will boost economic growth — is no longer the main factor driving the market, the Allianz chief economic advisor said on "Squawk Box."

"This is no longer a Trump trade. This is somewhere between a reflation trade, but much more importantly a liquidity trade. This is a liquidity-driven market," El-Erian said.

"I have underestimated the strength of the liquidity injections. Not just from the Fed, but I think the increase in [income] inequality has meant there's been less consumption and more investing in the market," he said. "And the profit share is so high that the companies are putting the money back into the marketplace."

In a Financial Times op-ed earlier this week, he said "ample liquidity" was the reason why last week's sell-off on President Donald Trump's Russian investigation woes was short-lived.

However, El-Erian told CNBC the benefits of the prolonged easy monetary policies around the world that have sent investors chasing riskier assets could eventually come home to roost. Global central banks are "distorting markets" and making investors "do things we and they 're going to regret," he said.

El-Erian said there's a hope in the stock market that the liquidity trade hands off to the reflation trade or betting on investments that would benefit from an increase in inflation and stronger economic growth.

If Trump's proposed policies such as tax cuts and deregulation were to become reality and boost the economy as promised, the reflation trade may take over as the biggest driver of the market, El-Erian said.

Such a move would diminish the influence of central bank policies on the stock market, he said. That would be fortuitous since the odds are more than 80 percent that the Fed will hike interest rates again at its June meeting. Rate increases tend to pressure stocks.