Pompliano reminds investors: Bitcoin's value test is approaching. Can cooling inflation support holding positions?

BTC0,87%

February 14 News, Bitcoin entrepreneur Anthony Pompliano recently stated that as inflation data declines, Bitcoin investors face the challenge of reassessing their holding motivations. Pompliano pointed out on Fox Business that the value of Bitcoin lies in its limited supply, and when governments increase money issuance, Bitcoin prices tend to rise. He believes that, like gold, Bitcoin is a preferred long-term investment asset, but during periods of weakening inflation, investors may need to be more cautious about their reasons for holding.

According to data from the U.S. Bureau of Labor Statistics, the Consumer Price Index (CPI) in January decreased from 2.7% in December to 2.4%. Moody’s chief economist Mark Zandi warned that reported inflation data might be lower than actual experience, implying that market demand for inflation-hedging assets like Bitcoin could be affected in the short term. Pompliano stated that the macroeconomic environment will continue to influence Bitcoin price volatility, referring to this as the “currency slingshot effect”—the short-term deflation masking the dollar’s devaluation trend, which may lead investors to focus more on Bitcoin’s value preservation function in the future.

Currently, market sentiment for Bitcoin has fallen to its lowest point since June 2022. The Crypto Fear & Greed Index shows an “extreme fear” score of 9. According to CoinMarketCap, Bitcoin’s current trading price is approximately $68,850, down nearly 29% over the past 30 days. Pompliano believes the Federal Reserve will continue to expand the money supply to combat inflation, which will further devalue the dollar, and as digital gold, Bitcoin’s value is expected to become more apparent in the future.

Pompliano’s view reminds investors that, despite obvious short-term market volatility, Bitcoin remains attractive in the context of the global macroeconomic environment and potential dollar devaluation. Monitoring CPI data and the dollar index closely will help assess the feasibility and potential returns of Bitcoin holding strategies.

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