Bitcoin entrepreneur Anthony Pompliano states that as inflation cools, Bitcoin investors are forced to reconsider their reasons for holding the asset. The Consumer Price Index fell to 2.4% in January, while Bitcoin’s price has declined over 28% in a month and market sentiment has hit multi-year lows. Pompliano argues that despite short-term deflationary forces, long-term monetary expansion will lead to dollar devaluation, which he expects to benefit Bitcoin’s value proposition as a finite-supply asset.
Bitcoin entrepreneur Anthony Pompliano stated investors must reconsider their thesis for holding Bitcoin as inflation data moderates. “I think the challenge for Bitcoin investors, can you hold an asset when there is not high inflation in your face on a day-to-day basis?” he said during a Fox Business interview.
The Consumer Price Index fell to 2.4% in January from 2.7% in December. However, Moody’s chief economist Mark Zandi recently told CNBC that inflation looks better on paper than in reality.
Bitcoin is often viewed as an inflation hedge due to its capped supply of 21 million coins. Investors may turn to it when central banks increase the money supply, eroding fiat currency purchasing power.
Market sentiment for Bitcoin has reached lows not seen since June 2022. The Crypto Fear & Greed Index posted an “Extreme Fear” score of 9 in its latest update.
Bitcoin is trading at $68,850, according to CoinMarketCap. This represents a decline of over 28% over the past 30 days.
Pompliano said the macro environment could create short-term volatility before Bitcoin resumes climbing. He predicted deflationary forces would lead to calls for money printing and lower interest rates.
He explained this would devalue the US dollar, though the impact would be initially masked. “The currency is going to be devalued at a time where deflation covers up the impact, so I call it a monetary slingshot,” Pompliano said.
The US dollar index is trading at $96.88, according to TradingView. It has fallen 2.32% over the past 30 days.
