Renowned financial analyst and Bitcoin advocate Anthony Pompliano explores the cryptocurrency market’s hottest question in his latest video: Is Bitcoin in a Bear Market?
Analyzing the steep 40% decline from an all-time high of $126,000 to $75,000, Pompliano explains the key dynamics investors need to understand.
Pompliano notes that, unlike the massive 80% declines of the past, Bitcoin has now become a more mature asset. Arguing that Bitcoin’s volatility has halved, the analyst predicts that the declines may therefore not be as deep as before. If volatility has fallen by 50%, a 40% pullback might be closer to the “bottom” than an 80% bear market, he suggests.
Pompliano notes that Bitcoin is no longer just for individual investors, but is also part of Wall Street, and says ETFs and options markets curb volatility. As institutional firms develop various financial strategies using Bitcoin, this leads to more controlled and “tame” price movements.
The analyst, recalling that the market is always forward-looking, attributes the recent decline of Bitcoin to an interesting reason: the market is now afraid of deflation rather than inflation. If investors believe they will not experience high inflation in the future, demand for Bitcoin, an “inflation hedge,” could decrease. While Bitcoin’s rise to $126,000 was driven by anticipated tariffs and inflation fears under the Trump administration, the current decline could be a consideration of reduced risk.
Referring to the recent drop in hash rate, Pompliano said there is nothing to worry about. He said major mining companies in North America had shut down machines to balance the power grid due to the intense cold, generating economic gains by selling power back to the grid. He argued that this situation did not have a direct and lasting negative impact on prices.
Pompliano attributes gold’s record performance as Bitcoin falls to “central bank actions.” According to Pompliano, central banks buy gold not to protect against inflation, but to “move away from fiat currencies.” As Bitcoin is not yet recognized as a reserve asset by central banks, it does not benefit as much as gold from this increase.
*This does not constitute investment advice.