Bitcoin has plummeted in recent days, with many new investors showing clear signs of panic while veteran holders didn't blink.
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Cryptocurrency commentator Anthony Pompliano says that declines of 30% or more are part of Bitcoin's history, having occurred 21 times in the past 10 years, about once every 18 months.
Reports revealed that the recent sell-off pushed the token to lows of around $82,000 during US trading.
“So Bitcoiners are used to this,” Pompliano said. “Now, the people who aren't used to this are going to be people from Wall Street. They're not used to this kind of volatility.”
Veteran expects swing
Pompliano said that people who have owned Bitcoin for a long time treat large fluctuations as normal. He argued that volatility helped generate the huge profits seen so far, claiming that Bitcoin has risen about 240 times over the past decade.
He added that while the 70% annual growth rate over that period is unlikely to continue, long-term returns in the 20% to 35% range would still outperform the stock.
“I would be worried if Bitcoin's volatility went to zero,” he said, explaining why price fluctuations are a sign of market activity rather than a flaw.
US market and liquidity tensions played a role.
Matthew Siegel, head of digital asset research at VanEck, said the decline was mainly due to events in the US session. He linked the decline to tightening U.S. liquidity and widening credit spreads, which reduced traders' appetite to hold risky positions.
Siegel also noted that large spending plans related to artificial intelligence are colliding with fragile funding markets, creating additional pressure.
Selling pressure could increase around the end of the year as other market participants also face bonus decisions and portfolio reviews.
Volatility rises again
Analysts at Bitwise and others reported that Bitcoin's volatility has increased over the past two months and is gradually creeping back to around 60 as of Monday.
Bitwise's Jeff Park noted that increased volatility can cause prices to move sharply in either direction. Based on the report, Pompliano and colleagues said that volatility is necessary for assets to rise significantly over time, and that market calm could actually be a red flag for some investors.
ETFs bring in more money and cause more money to go out.
The advent of Bitcoin ETFs has made it easier for customers of major brokers to gain exposure to the coin without directly owning it.
Still, there was about $4.7 billion left in crypto-related ETFs in November, according to data from Morningstar's Brian Armour. Armor added that while some funds have seen outflows, ETFs tied to smaller tokens such as Solana and XRP have attracted investment during the same period.
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unknown what happens next
Experts said the cryptocurrency market remains highly volatile, making it nearly impossible to predict its next move. Based on current signs, further fluctuations are expected.
For now, Bitcoin's history of steep declines, the new presence of institutional investors, and changes in liquidity in the US market are all factors that traders will be watching closely as we head into the end of the year.
Featured images from Gemini, charts from TradingView
