Today, bitcoin’s value is being determined in dollars. This is understandable considering that fiat currency is still the dominant currency. Although crypto experts believe that this trend will end soon, investors still need to be able to value the bitcoin asset in fiat currency.
Anthony Pompliano, a millionaire investor has rebutted against the accepted method of valuing Bitcoin. He addressed the way the digital asset is valued as well as the dreaded volatility on a recent episode of CNBC’s Squawk Box.
Don’t Value Bitcoin In Dollars
One bitcoin currently trades for $51K. It is the dollar that gives bitcoin an apparent worth. Pompliano says this shouldn’t be the case. Instead, Bitcoin should be priced using bitcoin. This way, “one Bitcoin still equals one Bitcoin,” says the investor.
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Bitcoin’s value, when gauged in bitcoin, does not really change. It was created in such a way as to increase in value rather than decline over time like the dollar.
Pompliano points out that most people don’t pay attention to this because they use dollars all day. Bitcoin wasn’t meant to be valued in dollars, as some of the problems that plague fiat currencies could also affect the currency, such as its volatility.
“The dollar itself is hyper volatile as well,” said Pompliano. “We just don’t think of that because all of the goods and services around us are priced in dollars.”
BTCUSD on TradingView.com| BTCUSD on TradingView.com
If it favors you, volatility is good
Joe Kernen interviewed Pompliano to discuss the volatility of bitcoin. This volatility is one reason why prominent politicians and governments advise investors not to invest in bitcoin. They explain that the fluctuating prices can lead to loss.
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Pompliano however does not see bitcoin’s volatility to be a bad thing. It is more about how volatility affects investors, he explained. An example of this is when a digital asset’s price swings upwards and the investor realizes gains from this move. This scenario would see volatility as a benefit. However, if it happens the other way, this would be considered a negative.
“Volatility is not good or bad, right? Basically, volatility is only bad when it goes against you, so if you long an asset and it goes down you don’t like volatility, if you long an asset and it goes up, you do like volatility.”
The millionaire also pointed out that another issue was that bitcoin’s volatility was also being mentioned in dollars. Given the latter’s also volatile and depreciating nature, Pompliano said that it was a flawed way of measuring volatility.
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