On March 19, Anthony Pompliano, the founder of Pomp Investments, appeared on Bloomberg TV’s “Bloomberg Crypto,” hosted by Sonali Basak and Tim Stenovec, to share his insights on Bitcoin’s recent price correction, which has seen the flagship cryptocurrency fall below $63,000.
TradingView data shows that Bitcoin prices peaked at $73,794 on the Bitstamp exchange on March 14th, have been falling for the past six days, and reached a low of $61,447 yesterday:
Source: TradingView
In a conversation marked by Pompliano’s depth of knowledge on Bitcoin’s historical performance and market dynamics, he provided a reassuring perspective on the current state of the market and what investors might expect moving forward.
Pompliano began by contextualizing the recent drop in Bitcoin’s price, describing it as a “small drawdown” when compared with the cryptocurrency’s historical volatility. He noted that during previous bull markets, such as in 2017, Bitcoin experienced multiple corrections of around 30%, while the current correction stood at approximately 13 to 15%. This, according to Pompliano, indicates that the current price movement is relatively mild and in line with Bitcoin’s typical market behavior.
Further emphasizing the point, Pompliano compared Bitcoin’s performance with traditional financial markets. He mentioned that over the last 10 years, Bitcoin has achieved a compound annual growth rate (CAGR) of 60%, vastly outpacing the S&P 500’s CAGR of 11%. Meanwhile, he said, over the last five years, Bitcoin’s growth has been even more pronounced, rising by 1500% compared to the S&P’s less than double increase. This stark contrast highlights Bitcoin’s potential for high returns, which inherently comes with high volatility.
Addressing the concerns about future market volatility, Pompliano suggested that the recent price correction could be seen as a wake-up call for traders, especially those new to the cryptocurrency market. He humorously noted the “irony” of Wall Street’s recent entry into the Bitcoin market through spot ETF approvals, which was quickly followed by a price crash, quipping, “welcome to Bitcoin.” This volatility, according to Pompliano, underscores the unpredictable nature of Bitcoin, which has even defied some of its historical trends in recent years.
Pompliano concluded by reminding viewers that Bitcoin remains an asset class characterized by significant volatility, despite being the best-performing asset over the past decade. He stressed the importance of acknowledging this volatility as part and parcel of investing in Bitcoin, especially as the asset continues to navigate uncharted territory.
Featured Image via Pixabay
