All Pomp, No Ceremony–Finally Some Sense on the Bitcoin Price Prediction Turntable
Anthony Pompliano, affectionately known as the Pomp, remains bullish on bitcoin despite the bearish market conditions. The founder and partner of Morgan Creek’s Digital Assets Division outlines three reasons for bitcoin’s inevitable return to its glory days. It was a welcome break from the ever spinning broken record of price predictions which, at best, are stabs in the dark.
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The Pomp Takes the Stand
CNBC’s Squawk Box wheeled out the Pomp on Monday morning for his take on the burst bitcoin bubble. A considered voice in the crypto ecosystem, the Pomp made predictions that at least attempted to find some basis in fact and justification.
In so doing, he speared an endless chorus of fortune tellers who seem perfectly comfortable making predictions based on nothing much more than groundless optimism or insipid pessimism.
The Pomp pimped bitcoin’s long-term future, despite conceding it may continue to slide toward $3000 USD, representing an 85 percent fall from its peak in December 2017, a period in which he said bitcoin was “overvalued.”
The reasoning behind the 85 percent fall from all-time highs was in reference to historical price patterns for the OG cryptocurrency: it has endured 80 percent falls twice in its ten-year history.
Pompliano’s Three-Pronged Cause For Confidence
The Pomp offered the Squawk Box team three reasons why he remains confident in the long-term potential–and price potential–of bitcoin.
First, he spoke directly to bitcoin’s technological value, an attempt to address the asset’s fundamentals that has become all-too rare:
“This is a transaction settlement layer. It’s the most secure in the world. It’s got to be worth something. It can’t be worth zero.”
Awesome. So the tech works and bitcoin is an excellent way to move money between people. He then proceeded to discuss bitcoin’s historical longer term performance in relation to other asset classes:
“The second is it’s the best performing asset class in the last ten years. It’s outperformed S&P, Dow, Nasdaq, et cetera, during the longest bull run. And so it experienced two 80% drops during that time, but the asset’s still up over 400% in the last two years.”
What needs to be remembered, of course, is that past performance is no guarantee of future results.
The Pomp then talks about the assumed forthcoming influx of institutional money into the space, which to many represents the promise of a welcome injection of liquidity and an underlying basis of support:
“I think what’s important to remember is that through 2017, all of the buyers were retail, right? And so now what you’re seeing in 2018 as the price has gone down, you’re starting to see institutions come in. And one of the things that doesn’t get talked about much is that most of these institutions are not buying on exchanges. They’re actually buying on the OTC market, which we don’t have great transparency into or insight. So what I think you’re seeing is the washout of these retail investors.”
Squawkin’ Loud, Sayin’ Nothin’
Pompliano’s commentary was a pleasant change from the baseless propheticizing the industry has been inundated with over the past few weeks. We’ve had Ran NeuNer’s “panic is clearly upon us” tweet:
Up until now even though we have been in a bear market we haven’t seen panic or capitulation. In the last few days panic is clearly upon us. It’s a great signal that the bottom is near…
— Ran NeuNer (@cryptomanran) November 20, 2018
We’ve heard from Stephen Innes of the Oanda exchange, predicting a price point of $2,500 for January next year. On what grounds?
“There’s still a lot of people in this game. [If Bitcoin] collapses, if we start to see a run down toward $3,000, this thing is going to be a monster. People will be running for the exits.”
Monsters and people running for exits may make for enticing sound bites from a horror film but as analysis goes, they are hardly the words of a seriously thought-through study.
Predictably, Dr. Roubini–who continues to discuss cryptocurrency with fringe lunatics and refuse overtures from considered thought leaders–issued, through Twitter, (the preferred medium of New York University economics professors) his “I feel vindicated” tweet:
With BTC down almost 80% from peak (from 20K to ~4K) & all other cryptocurrencies down 80% to 99% I rest my case that this crypto bubble went bust for good. I feel vindicated. So I will take a break for a few days from this toxic Crypto Twitter. Waste of time to convince zealots
— Nouriel Roubini (@Nouriel) November 20, 2018
Evergreen bitcoin bull, Fundstrat’s Tom Lee, has toned his end-of-year prediction down to $15,000, and talks of the hope of institutional money entering the market:
“The next wave of adoption is institutional. There is a crossover happening. This is just an awkward transition. Institutional backing will come soon. You will get it partly through infrastructure, like Bakkt, which is launching soon.”
Problem is, we’ve been hearing that all year. And it was only back in March that his price predictions for December were $25,000. Tom Lee can continue to lower the bar of expectations and remain “bullish” all he likes. But at some point he might need to adjust his stance to more closely represent reality.
And then there’s John McAfee, who we all love dearly. It is increasingly clear that his interest in crypto is not the tech or the economics, but the fun of ruffling feathers. His “fear and loathing” tweet suggests he sees the market approaching the bottom:
I'll soon get off my ass. This has been an enjoyable rest and I hate to see it end, but I'm afraid we've eaten everybody that won't fight back, which generally indicates an imminent market turn. I'll have to get back work. So will all of you. Your fear and Loathing will soon end.
— John McAfee (@officialmcafee) November 24, 2018
Standing Out in a Crowded Field of Non-experts
The Pomp, through the use of contrast, gave us a refreshing reminder that the Squawk Box and Twitter are tailored for hysterical outbursts with no analysis supporting them. Such is the lack of intellect in way too much crypto market commentary.
Sound off below. Do you wish commentators would just stop predicting the future price of bitcoin?
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