Bitcoin’s 30% Drop: Veterans Unfazed as Newcomers Panic

Anthony Pompliano’s analysis reveals that Bitcoin’s dramatic price swings are deeply embedded in the cryptocurrency’s market DNA, with 30% or greater declines occurring approximately once every one and a half years over the past decade. This historical context explains why experienced Bitcoin holders remain unfazed during such downturns. ‘Bitcoiners are used to this,’ Pompliano noted, contrasting their composure with the reaction of ‘people who are coming from Wall Street’ who ‘are not used to this type of volatility.’

This volatility has been instrumental in generating Bitcoin’s extraordinary historical returns, with the cryptocurrency rising approximately 240 times over the past decade. Pompliano emphasized that while Bitcoin’s 70% compound annual growth rate over that period is unlikely to continue, even reduced long-term returns in the 20-35% range would still significantly outpace traditional stock market performance. ‘I would be worried if Bitcoin’s volatility drops to zero,’ he explained, framing price swings as a sign of an active, dynamic market rather than a structural weakness.

Matthew Sigel, VanEck’s head of digital assets research, identified the sell-off as primarily a ‘US-session event,’ linking the decline to tighter US liquidity conditions and widening credit spreads that reduced traders’ appetite for riskier positions. The convergence of ambitious artificial intelligence spending initiatives with what Sigel described as a ‘fragile funding market’ created additional pressure on cryptocurrency valuations.

The timing of the downturn coincides with year-end portfolio reviews and bonus decisions across financial institutions, factors that market participants acknowledge may contribute to further selling pressure. This institutional context distinguishes the current market environment from earlier Bitcoin cycles, reflecting how the cryptocurrency’s integration into mainstream finance has altered the dynamics of price movements.

Analysts at Bitwise and other firms reported that Bitcoin’s volatility has been climbing over the past two months, reaching approximately 60 as of Monday. Jeff Park of Bitwise noted that elevated volatility can drive prices sharply in either direction, creating both risk and opportunity for market participants. This perspective aligns with Pompliano’s view that volatility is necessary for the asset to achieve substantial long-term gains.

The introduction of Bitcoin ETFs has transformed market access, enabling major brokerage clients to gain cryptocurrency exposure without direct coin ownership. However, data from Morningstar’s Bryan Armour reveals that approximately $4.7 billion flowed out of crypto-related ETFs during November. While Bitcoin-focused products experienced outflows, ETFs tied to smaller tokens such as Solana (SOL) and XRP attracted investments during the same period, suggesting a rotation within the digital asset space rather than a wholesale retreat from cryptocurrency exposure.

Experts acknowledge the near-impossibility of predicting Bitcoin’s next directional move given the market’s inherent volatility. The convergence of Bitcoin’s historical pattern of deep pullbacks, the growing presence of institutional participants, and shifting US liquidity conditions creates a complex landscape for traders navigating the year’s final weeks.

Market participants are closely monitoring whether current conditions represent a temporary adjustment or the beginning of a more sustained trend. The divergence between veteran and newcomer reactions, combined with the structural changes brought by ETF adoption and institutional involvement, suggests that Bitcoin’s market maturation continues to evolve in ways that both preserve its characteristic volatility while integrating new influences from traditional finance.