Benzinga - During a March 20 interview with Bloomberg, crypto investor and commentator Anthony Pompliano said, "This is a pullback for ants compared to what Bitcoin historically has been through."
Bitcoin has performed phenomenally in 2024, surpassing all-time highs and building hype along the way. However, things haven't all been great for the token. It has experienced some significant drawdowns, particularly this month. While these pullbacks have shaken the confidence of some investors, others, such as Pompliano, are unfazed.
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"In previous bull markets, Bitcoin has experienced 30% drawdowns five or more times," he said. "So on the way up in 2017, we went from $1,000 to $20,000. There were multiple 30% drawdowns. Right now, we’re about 13% to 15% drawdown."
Pompliano, who looks at past bull markets and analyzes the price patterns, noted that Bitcoin's ride to current levels has seen significant roadblocks, even during bull markets.
"If you want volatility on the upside, you're going to need some volatility on the downside to get there," Pompliano said.
When Bitcoin reaches new highs, it usually drops again by 10% to 15%, Pomplioano said. This drawdown follows some Bitcoin's previous patterns, albeit to a lesser degree than in the past when Bitcoin has fallen more than 30% in a bull market.
He also pointed out the simplicity of Bitcoin.
"It is kind of the epitome of what economics and a lot of economic theory has always pontificated about … people are buying Bitcoin at the price they deserve."
Bitcoin's straightforward supply system allows the token to have deflationary tendencies and makes the price more dependent on market demand. This makes Bitcoin's price more representative of market sentiment and adoption.
Pompliano believes that these forces are causing the drawdowns. As the price goes up, more people are looking to take profits. He said that at one point, "1,500 wallets per day were reaching the $1 million threshold." As Bitcoin makes more millionaires, some will be tempted to sell. On the other hand, as more people see potential upside in Bitcoin and how it could bring about profits, they may be tempted to invest and continue to drive the token up, making Pompliano's point about people buying and selling their tokens at a price that they deserve.
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