Retail investors tend to buy and hold, or "hodl" Bitcoin BTC/USD and other cryptocurrencies. So why is it such a volatile asset and who is selling the world's oldest cryptocurrency?
What To Know: The significant declines and increased volatility over the last few months can largely be attributed to institutional investors, according to Pomp Investments' Anthony Pompliano.
"Those folks look at Bitcoin as the riskiest asset in their portfolio," Pompliano said Friday on CNBC's "Squawk Box."
When markets enter a risk-off environment, institutions are going to sell Bitcoin, but retail investors treat Bitcoin as a reserve asset and look to dollar cost average when it falls, he said, citing on-chain metrics. "There are definitely two different types of holders of Bitcoin."
The other component is the timing around the end of the year, Pompliano said.
At the end of 2021, Bitcoin was up more than 60% and a lot of other cryptocurrencies were up much more, so fund managers were taking profits, he explained.
What's Next: Pompliano told CNBC he doesn't think the past few months are a good gauge for where Bitcoin is headed. Based on the on-chain metrics, he believes most of the short-term forced institutional selling is over with.
"I think that kind of going into tax season you'll see some selling for taxes," he said. "And then we will kind of be off to the races again."
See Also: Why Is Bitcoin Taking A Much Harsher Beating From Russia's Ukraine Invasion Than Stocks?
BTC Price Action: Bitcoin is down 27.1% over a three-month period. At publication Friday morning, Bitcoin was up 9.70% at $39,433.80 over a 24-hour period.
Photo: kevin92 from Pixabay.
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