Bitcoin investors are being forced to rethink why they hold the asset as inflation data cools, based on Bitcoin entrepreneur Anthony Pompliano.
“I feel the challenge for Bitcoin investors is the way to hold an asset when there isn’t a threat of high inflation each day?” Pompliano said during an interview with Fox Business on Thursday. “Can you continue to consider in the worth proposition of Bitcoin, which is that it’s a limited supply asset? If they print money, the worth of Bitcoin goes up,” he said.
“Bitcoin and gold are great long-term things,” he said. According to the Bureau of Labor Statistics, the patron price index (CPI) fell to 2.4% in January from 2.7% in December. However, Moody's chief economist Mark Zandi recently told CNBC that inflation “looks higher on paper than it does in point of fact.”
Anthony Pompliano spoke with Charles Payne on Fox Business on Thursday. Source: Fox Business
Bitcoin (BTC) is often viewed as a hedge against inflation since there’ll only be 21 million coins ever created. When central banks increase the cash supply and the worth of fiat currencies declines, investors often turn to perceived riskier assets like Bitcoin to guard their purchasing power.
Bitcoin sentiment has reached its lowest point in several years
This comes at a time when sentiment towards Bitcoin has hit a multi-year low not seen since June 2022. The Crypto Fear & Greed Index, which measures overall crypto market sentiment, posted an “Extreme Fear” rating of 9 in its update on Saturday.
Bitcoin is down 28.14% within the last 30 days. Source: CoinMarketCap
According to CoinMarketCap, Bitcoin is trading at $68,850 on the time of publication, down 28.62% over the past 30 days.
The devaluation of the US dollar is being covered up by a “money spinner”.
Pompliano said the macroeconomic environment could cause short-term volatility for Bitcoin before it resumes its uptrend.
“We will get deflationary forces within the short term, people will ask to print money and cut rates of interest,” he said.
He explained that this is able to result in a devaluation of the US dollar, but the results wouldn’t be immediately visible.
“The currency is being devalued at a time when deflation is masking the impact, so I call it a currency spin,” Pompiano said.
Pompliano predicted that the Federal Reserve will proceed to expand the cash supply to “cope with inflation,” but because the dollar faces further devaluation, he expects Bitcoin to change into “more worthwhile than ever.”
The U.S. Dollar Index, which tracks the dollar's strength against a basket of major currencies, has fallen 2.32% over the past 30 days and is trading at $96.88, based on TradingView.
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