Pompliano: Easing inflation tests Bitcoin holders as dollar dips
Bitcoin holders are reassessing their positions as U.S. inflation cools, with entrepreneur Anthony Pompliano saying the cryptocurrency could gain greater long-term value once current deflationary pressures subside and the U.S. dollar’s weakening becomes more apparent. He made the remarks in a Thursday interview on Fox Business.
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Pompliano said the key question for investors is whether they can maintain conviction in Bitcoin’s fixed-supply thesis during a period without elevated day-to-day inflation. He added that if monetary authorities expand the money supply, it historically supports higher Bitcoin prices, and described both Bitcoin and gold as strong long-term exposures.
The Consumer Price Index (CPI) slowed to 2.4% in January from 2.7% in December, according to the Bureau of Labor Statistics. However, Moody’s chief economist Mark Zandi told CNBC that inflation “looks better on paper than in reality.”
Anthony Pompliano spoke to Charles Payne on Fox Business on Thursday. Source: Fox Business
Bitcoin (BTC) is frequently viewed as an inflation hedge due to its capped supply of 21 million coins. When central banks boost the money supply and fiat currencies lose purchasing power, investors often rotate into risk assets such as Bitcoin to preserve value.
Bitcoin sentiment at multi-year lows
Market sentiment for Bitcoin has fallen to levels last seen in June 2022. The Crypto Fear & Greed Index registered “Extreme Fear” with a score of 9 in its Saturday update.
Bitcoin is trading at $68,850 at the time of writing, down 28.62% over the last 30 days, according to CoinMarketCap.
Bitcoin is down 28.14% over the past 30 days. Source: CoinMarketCap
Pompliano: USD weakness masked by a “monetary slingshot”
Pompliano said the broader macro backdrop could produce short-term volatility in Bitcoin before a potential recovery. He expects near-term deflationary forces alongside calls for increased money printing and interest rate cuts.
He argued this would erode the U.S. dollar’s value, although the immediate impact may be obscured by deflation, a dynamic he referred to as a “monetary slingshot.” Pompliano projected the Federal Reserve would continue expanding the money supply to “deal with inflation,” and as the dollar weakens further, he anticipates Bitcoin could become “more valuable than ever.”
The U.S. Dollar Index (DXY), which measures the greenback against a basket of major currencies, is down 2.32% over the past 30 days at 96.88, according to TradingView.
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