Bitcoin: ‘Monetary Slingshot’ to Boost BTC as Fed Fights Deflation – Pompliano

Bitcoin holders are facing a test of conviction as deflationary pressures temporarily overshadow the long-term bullish case for the cryptocurrency, according to Anthony Pompliano, chairman of ProCap Financial. Pompliano predicts a significant rebound driven by a “monetary slingshot” – a scenario where central bank efforts to combat deflation ultimately lead to currency devaluation and increased demand for scarce assets like Bitcoin.

Speaking on FOX Business, Pompliano argued that Bitcoin’s fundamental value proposition remains intact despite the recent 50% drop from its all-time high of $126,000 to around $70,000. This decline, he explained, coincides with a shift in economic concerns from inflation to deflation.

“Can you hold an asset when there is not high inflation in your face on a day to day basis? Can you still believe in what Bitcoin’s value proposition is, which is it’s a finite supply asset,” Pompliano asked, framing the current market conditions as a crucial test for investors. He encouraged those who invested at higher prices to view the current level as an opportunity, stating, “If you liked it at one hundred twenty six thousand, Consider love it at seventy thousand.”

The Mechanics of a ‘Monetary Slingshot’

Pompliano’s “monetary slingshot” theory centers on the expectation that central banks will respond to deflation by increasing the money supply. While intended to stimulate economic activity, this monetary expansion will ultimately devalue fiat currencies. Bitcoin, with its limited supply of 21 million coins, will become increasingly attractive as a store of value.

“We’re going to print a bunch of money to try to deal with deflation. And all of a sudden, as we come out of that thing, now we’re going to see that the currency has been devalued and Bitcoin becomes more valuable than ever,” he explained. This dynamic creates a challenging environment for Bitcoin investors in the short term, as deflationary forces suppress immediate price gains while the Federal Reserve implements policies that will ultimately benefit the cryptocurrency.

The timing is critical. The current deflationary environment masks the long-term benefits that Bitcoin will derive from future monetary policy. Pompliano is confident that “If they print money, Bitcoin is going higher over the long run.”

Deflationary Forces at Play

Recent economic data supports the emergence of deflationary pressures. Real-time data indicates declining prices across several categories, with rent falling for 32 consecutive months and both food and gas prices trending downward. The rapid advancement of artificial intelligence is accelerating job displacement, adding to these deflationary forces. The U.S. Economy is facing downward pressure from tariffs, AI and robotics, all contributing to lower prices.

Bitcoin’s Performance Relative to Gold

Bitcoin initially rallied in the summer of 2025 amid concerns about tariff-related inflation, with Google searches for “currency debasement” spiking and benefiting gold and silver. However, as deflation replaced inflation as the primary economic narrative, Bitcoin failed to participate in the subsequent rally.

“People were talking about, is inflation coming because of the tariffs? As soon as all of a sudden we realized it’s not coming. Well, do you need to put a ton of your money into Bitcoin if deflation is the bigger risk? And so I think that’s where you see the cooling off of Bitcoin,” Pompliano said.

Gold has outperformed Bitcoin in the current environment, driven by central bank buying rather than retail investor concerns about currency debasement. While foreign central banks are moving away from all fiat currencies, they are not yet ready to adopt Bitcoin as an alternative.

The current market conditions present a unique scenario for Bitcoin investors. While short-term deflationary pressures may continue to weigh on prices, Pompliano’s analysis suggests that the long-term outlook for Bitcoin remains positive, particularly if central banks respond to economic weakness with further monetary easing. The “monetary slingshot” effect, he believes, will ultimately propel Bitcoin to new heights as fiat currencies lose their value.