Pompliano: Bitcoin suddenly big dump crashed, because development started to become boring?

Recently, the drastic fluctuations of Bitcoin have drawn widespread attention in the crypto market. Last month, there was a sudden sharp fall, dropping below 100,000, and recently it has slightly climbed up. The price of Bitcoin ( BTC ) has fluctuated like a roller coaster, prompting investors to ask: why did Bitcoin suddenly crash? In a recent interview, Bitcoin Whale investor Anthony Pompliano accepted an interview with Squawk Box, sharing his views and possible reasons for Bitcoin's sudden crash. He pointed out that the rise of stablecoins may have replaced certain roles of Bitcoin in the global financial market, while Wall Street is adjusting Bitcoin's “market positioning” and reassessing whether Bitcoin still has high returns. Below is a summary and analysis of the key points from the video report. Pure market observation, not any investment advice.

The market role of Bitcoin has undergone a major transformation.

Pompliano emphasized that although Bitcoin has long been portrayed as digital gold, with investors treating it as a store of value and a hedge, as the crypto market begins to take off, Bitcoin's positioning is changing. He pointed out that Bitcoin's volatility is gradually decreasing, making it no longer the high-risk and high-return asset that traditional investors expect. This change has far-reaching implications for the market, as low volatility has led to more institutional investors entering the market; however, this has also resulted in a decline in Bitcoin's growth potential.

Bitcoin investors feel that the development has become very boring?

Pompliano stated that the risk-reward profile of Bitcoin has changed dramatically over the past decade. For example, if Bitcoin was purchased at a price of $125 in 2012, investors could have seen returns of over 100 times as prices rose. However, as Bitcoin's price stabilizes at higher levels, the potential for future returns appears to be diminishing. He also mentioned that despite the reduction in Bitcoin's Fluctuation, this change has been uninteresting for many early investors. Bitcoin's price no longer fluctuates as rapidly as it used to, which means diminished market appeal for investors who rely on price fluctuations to make profits. This may also be one reason why many early investors have chosen to exit the market recently.

Are stablecoins rising to become competitors to Bitcoin?

The market role of Bitcoin has changed, and the rise of stablecoins seems to have become a threat? Stablecoins? For example, Tether (USDT) and USD Coin (USDC) are pegged to fiat currencies (usually the US dollar) and have relatively stable prices, becoming increasingly favored in the financial markets. These stablecoins are not only widely used in trading but are also seen as a tool to provide users with a more reliable means of value storage in emerging markets. Pompliano points out that the rise of stablecoins is quickly replacing Bitcoin's original role. The rapid expansion of stablecoins globally, especially in emerging markets, has exceeded expectations. For many countries, stablecoins have become a more practical alternative, especially in situations where national currencies are unstable or inflation is severe.

The main advantage of stablecoins lies in their price stability, making them more suitable as tools for daily payments and value storage. Compared to Bitcoin, stablecoins avoid the risks brought by high fluctuations, becoming the preferred choice for many investors and consumers. In cross-border transactions, the application of stablecoins can save a significant amount of time and costs without going through the complex processes of traditional financial institutions.

Wall Street needs more liquid assets.

Despite the rise of stablecoins posing a challenge to Bitcoin, Pompliano believes that Bitcoin still possesses its unique value, especially in its role as digital gold. Stablecoins have captured market share in the value storage and payment sectors, but Bitcoin remains an effective hedge asset, and its long-term potential should not be underestimated. However, market demand is changing, with institutional investors entering the market, and the investment demand for Bitcoin is increasingly leaning towards value storage rather than as a tool for everyday trading. Wall Street, however, prefers strategies that offer both liquidity and risk-return rates, and he believes that Wall Street's attitude towards cryptocurrencies is evolving.

This view is supported by some other Wall Street analysts, with ARK's Cathie Wood also expressing concerns about the uncertainty in the Bitcoin market and the rise of stablecoins in a recent interview. She believes that the rapid emergence of stablecoins will undermine Bitcoin's role as a value storage tool, which may affect its future price trends.

Recently, many early Bitcoin Whales suddenly sold off in large quantities, leading to various speculations. Investors are observing whether there is still room for profit when entering the market now. However, aren't all financial investment products the same? Stable profits mean being rigid without higher performance. Speculative products have high profits but also relatively high risks. Yet, there are always investors who want to gamble on the future. So, is Bitcoin still considered a high-risk investment tool? If treated as a value reserve asset, will the coin price not surge higher? It's really hard to say.

This article Pompliano: Bitcoin suddenly plummets and crashes, because development has started to become boring? Originally appeared in Chain News ABMedia.