Bitcoin fell sharply in recent days and experienced holders barely blinked, while many newer investors showed clear signs of panic.
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According to crypto commentator Anthony Pompliano, declines of 30% or more are part of Bitcoin’s history. They have happened 21 times in the last ten years and usually occur about once every year and a half.
Reports have indicated that recent selling has pushed the token to a low of around $82,000 during US trading.
“So Bitcoiners are used to this,” Pompliano said. “The people who aren’t used to this are the people who come from Wall Street. They’re not used to this kind of volatility.”
Veterans expect the swings
Pompliano said people who have owned Bitcoin for years consider big swings normal. He argued that volatility has helped create the huge gains made so far: Bitcoin is up about 240x in the last ten years.
He added that a compound annual growth rate of 70% over that period was unlikely to last, but that even lower long-term returns – between 20 and 35% – would still be better than the stock.
“I would be concerned if Bitcoin’s volatility drops to zero,” he said, explaining why price swings could be a sign of an active market rather than a mistake.
US markets and liquidity problems played a role
Matthew Sigel, head of digital asset research at VanEck, said the sale was primarily an event during an American session. He linked the decline to tighter US liquidity and wider credit spreads, which made traders less willing to take risky positions.
Sigel also noted that major spending plans tied to artificial intelligence collided with a fragile financing market, creating additional pressure.
Around year-end, other market participants face bonus decisions and portfolio revisions, which could increase selling pressure.
Volatility is rising again
Analysts at Bitwise and other companies reported that Bitcoin volatility has risen over the past two months and has risen again to around 60 as of Monday.
Bitwise’s Jeff Park pointed out that higher volatility can move prices sharply in either direction. Based on reports, Pompliano and others said volatility is necessary for the assets to post big gains over time, and that calm markets would actually be a warning sign for some investors.
ETFs raised more money – and more flowed out
The arrival of Bitcoin ETFs has made it easier for the clients of major brokers to gain exposure without directly holding coins.
Yet the data from Morningstar’s Bryan Armor roughly shows $4.7 billion exited crypto-related ETFs in November. Armor added that while some funds saw outflows, ETFs tied to smaller tokens like Solana and XRP attracted investment over the same period.
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What comes next is unclear
Experts say predicting the next move is virtually impossible as crypto markets remain highly volatile. Based on current signals, more fluctuations are likely.
For now, Bitcoin’s history of deep pullbacks, the new presence of institutional players and the changing liquidity in US markets are all factors that traders will be keeping a close eye on as the year ends.
Featured image of Gemini, chart from TradingView