Bitcoin evangelist Anthony Pompliano has told CNBC that the leading cryptocurrency by market capitalization will do "very well" in the long term despite the devastating crash.
The magical price level
According to Pompliano, there was "definitely" a psychological moment of $100,000.
The investor claims that a lot of those who held Bitcoin for a long and you hit $100,000 decided that this was enough for them. "Some of these people sold," he added.
Moreover, as noted by Pomp, Bitcoin is now more financialized than it has ever been before. He named ETFs and options as some examples of such novel financial instruments.
The deflation risk
Pompliano has identified deflation as the biggest risk as of now. "Bitcoin has sold off aggressively over the last couple of months, and I think that it is tied somehow to that deflation," he added.
In a deflationary environment, the general price of goods and services falls, which means the purchasing power of cash increases.
Pompliano appears to imply that the recent aggressive sell-off is a mechanical reaction to this lack of "inflationary fuel." The immediate "buy" pressure for Bitcoin weakens if there is no immediate fear of the dollar losing value.
More competition
Finally, as noted by Pomp, there are other things to do in the market for those who are into Bitcoin. These include artificial intelligence and prediction markets.
According to the investor, the attention of speculative investors has become increasingly fractured, which could have contributed to the recent underwhelming price action.
Alex Dovbnya
Arman Shirinyan
Dan Burgin