Bitcoin’s long-standing identity as an inflation hedge is facing a new reality. During a February 12 interview on Fox Business, Anthony Pompliano addressed the impact of cooling U.S. inflation on Bitcoin’s core narrative, arguing that the current environment is a “conviction test” for investors.
- Inflation cooled to 2.4%, testing Bitcoin’s inflation-hedge narrative.
- Pompliano sees short-term deflation leading to future money printing.
- Bitcoin remains volatile near $69K, with sentiment in Extreme Fear.
- 2026 forecasts range widely from $65K to $200K.
The January 2026 Consumer Price Index showed annual inflation falling to 2.4%, down from 2.7% in December – the lowest reading since mid-2024. With price pressures easing, the urgency behind the inflation-hedge thesis appears less immediate, forcing investors to reassess why they hold Bitcoin in the first place.
The Conviction Test
Pompliano questioned whether investors who bought Bitcoin solely as protection against rising prices can maintain confidence when inflation is no longer “in your face.” If inflation continues to cool – or even turns deflationary in the short term – the psychological case for Bitcoin could weaken before it strengthens.
He warned that deflationary forces often push policymakers toward aggressive intervention. In his view, short-term deflation can mask deeper structural currency debasement. He described this dynamic as a “monetary slingshot” – a scenario where the Federal Reserve eventually expands the money supply to counter slowing growth, setting the stage for Bitcoin to regain momentum as a scarce, finite asset similar to gold.
Market Backdrop: Extreme Fear and Volatility
At the time of the interview, Bitcoin was trading near $66,221, down roughly 28% over the previous month. The Crypto Fear & Greed Index plunged to 9 – a level categorized as Extreme Fear and not seen since 2022.
Meanwhile, the U.S. Dollar Index slipped 2.3% over the month to 96.88, reflecting shifting expectations around interest rates. As of February 14, Bitcoin has rebounded modestly to around $69,620 after briefly dipping toward $65,000 earlier in the week.
Technical analysts note that Bitcoin remains below its 200-day moving average, keeping the broader trend classified as weak. A decisive reclaim of the $90,000 level is widely viewed as necessary to restore full bullish momentum.
Economists Push Back
Not everyone is convinced that inflation has truly cooled. Mark Zandi argued that the 2.4% CPI print may be misleading due to data irregularities linked to the late-2025 government shutdown.
According to Zandi, missing price surveys forced statistical assumptions that understated inflation. Using private-sector data, Moody’s estimates actual inflation closer to 2.7%–3.0%. He also warned that the U.S. economy remains fragile, with job growth heavily concentrated in healthcare and limited strength across other sectors.
The contrast is stark: while Pompliano focuses on long-term monetary dynamics, Zandi highlights short-term economic vulnerability and statistical uncertainty.
Bitcoin Price Targets for 2026
Analyst projections for the rest of 2026 reveal a deeply divided market.
Standard Chartered recently cut its year-end Bitcoin target to $100,000 from $150,000, cautioning that prices could first fall toward $50,000 amid ETF outflows.
Bernstein maintained a $150,000 target, calling the current correction the “weakest bear case” in Bitcoin’s history due to resilient institutional ETF holdings.
Goldman Sachs outlined a bullish scenario near $200,000, driven by institutional adoption, while Fidelity Investments strategist J. Timmer suggested Bitcoin may trade between $65,000 and $75,000 in what he described as a “rest year” following 2025’s peak.
The Bottom Line
Cooling inflation has shifted the narrative from panic hedging to strategic patience. Bitcoin is no longer reacting to runaway CPI prints – it is reacting to doubts about growth, data reliability, and central bank policy.
For believers like Pompliano, the real catalyst lies ahead: if deflation pressures force renewed monetary expansion, Bitcoin’s scarcity could once again dominate the conversation. Until then, the market appears trapped between extreme fear and long-term conviction.
The information provided in this article is for educational purposes only and does not constitute financial, investment, or trading advice. Coindoo.com does not endorse or recommend any specific investment strategy or cryptocurrency. Always conduct your own research and consult with a licensed financial advisor before making any investment decisions.
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Source: https://coindoo.com/deflation-could-ignite-bitcoins-next-surge-anthony-pompliano-warns/
