VC Pompliano says bitcoin bottom will drop 85% from high

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VC Pompliano says bitcoin bottom will drop 85% from high

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Anthony PomplianoMorgan Creek Digital Assets founder Anthony Pompliano expects bitcoin will bottom out at 85% of previous highs.

Interviewed on CNBC’s Squawk Box, he said there are three things to remember about bitcoin:

  • it’s a transaction layer, the most secure in the world
  • bitcoin is the best performing asset class in the past 10 years, still up over 400% in the past two years even at current values
  • third, growth was all driven by retail investors and institutions have yet to enter the market in a substantial way.


Where do new buyers enter?


Anthony Pompliano on CNBCAsked where new buyers may reenter the market if they were paying $9000 just months ago, Pompliano said “It’s important to remember that all throughout 2017, all the buyers were retail. Now in 2018 as the prices are drawn down, you’re seeing institutions starting to come in.”

Pompliano said most institutions are not buying on exchanges. They are buying the OTC market where there is little transparency. “What I think you are seeing is the washout of these retail investors at the cost of institutional investors,” he added.


Bitcoin miners are now losing money


Satoshi's bitcoin whitepaperIt’s estimated that mining bitcoin costs an average of $7000 and many bitcoin miners are now losing money if their costs are prohibitive especially for energy.

Pompliano agreed some miners are losing money but others in low-cost energy countries such as China are able to continue mining profitably at cost levels of $2000 per bitcoin.


Morgan Creek is buying into the down market


Morgan Creek Capital ManagementWhen asked if he’s buying in the down market, Pompliano replied, “We’ve been pressing into it the whole way down.”

Clearly, he’s one investor who is prepared to put his money where the bitcoin is, even if it’s not yet reached the bottom.

You can view Anthony Pompliano’s CNBC Squawk Box interview here.

Visuals courtesy CNBC