Bitcoin: Why you shouldn’t be “overly excited or scared” by BTC’s swings

  • Pompliano explains BTC’s recent drop is normal, highlighting profit-taking and seasonal trends.
  • He predicts a bullish future for Bitcoin coupled with the power of AI. 

Typically, altcoins follow Bitcoin’s [BTC] pattern, but at press time, the entire crypto market was on an uptrend while BTC dropped by 2.16% and was trading at $61.3K.

Impact of Mt. Gox repayment plans on BTC

The decline is notable compared to 6th June, when BTC was at $71.9K. Many attributed the drop to the defunct Bitcoin exchange Mt. Gox’s repayment plan.

However, Alex Thorn, Head of Firmwide Research at Galaxy Digital, noted that the reimbursement plan, “will cause less Bitcoin sell pressure than the market expects.”

Pompliano’s bullish outlook on BTC

Amidst this news, Anthony Pompliano, host of the Pomp podcast, in a recent interview with CNBC Squawk Box said, 

“Bitcoin is up 40% YTD and is up 100% in the last year so in terms of volatility, this is pretty expected.” 

Explaining the reasons behind the same, Pompliano elaborated on the recent market behavior, noting that in previous bull markets, there have been multiple drawdowns of 3% or more. He stated, that right now we are down by 15% and exclaimed, 

“This is the right kind of bandwidth you would expect.”

Here he highlighted that when an asset rises significantly, profit-taking is inevitable. There was an explosive rally at the start of the year, followed by natural profit-taking.

See also  Stablecoin Issuer Tether Discontinues Support for Algorand (ALGO) and EOS Implementations

Pompliano also mentioned that many traders are engaging in basis trading, going long in the spot market and short in futures, which dampens price movements and contributes to selling pressure.

Additionally, he also talked about the seasonal trend wherein he noted, that in summer time there are many investors who often say, 

‘Invest in May and then go away,’ 

Expanding on the topic, he further noted that this pattern is typical, with Q4 often being a big quarter, while “Q2 and Q3 tend to go kinda sideways”.

Can Bitcoin and AI co-exist?

Interestingly, Pompliano also highlighted Artificial Intelligence (AI)  as a major driving force. He noted that the focus has shifted from Bitcoin and the general crypto ecosystem to AI.

Pompliano believes this shift is not detrimental but rather can be seen as a common ground for both technologies to coexist. He emphasized, 

“AI is going to create enormous amounts of wealth and Bitcoin is going to protect that wealth.” 

Echoing similar sentiments was Alexis Ohanian, Founder of Seven Seven Six, who said, 

“It’s my theory that the age of AI and the ascendance of blockchain technology are about to collide and reinforce each other.” 

Thus, even if Bitcoin’s current price action concerns investors, the future, coupled with the power of AI, could have a significant and mostly bullish impact on Bitcoin. As Pompliano put it, 

“When a decades-long trend is playing out, don’t get overly excited or scared based on day-to-day price movements.” 

Next: Bitcoin, Ethereum lead the way as crypto outflows surpass $500M

Source link

See also  Trump says JPMorgan's Jamie Dimon no longer Bitcoin critic, considers him for Treasury