Bullish CEO and former New York Stock Exchange (NYSE) President Tom Farley has commented on the significant price fluctuations observed in the Bitcoin market, stating that such volatility is "a structural reality that will last for many years."
Speaking with CNBC, Farley expressed that Bitcoin's recent return to the $90,000 level was encouraging, though not unexpected from his perspective.
Farley, who admitted to turning off price monitors after transitioning to a full-time crypto manager role, emphasized, "Volatility is real and will be with us for a long time." He explained that with approximately 160,000 Bitcoins produced annually, representing a supply of about $15 billion, the market requires a constant influx of new buyers to maintain stability.
Factors Influencing Bitcoin's Volatility
Farley highlighted how MicroStrategy's substantial Bitcoin purchases, absorbing around 180,000 BTC in the first seven months of the previous year, significantly impacted market dynamics. He noted that when the company reduced its purchases to 15,000–20,000 BTC for the remainder of the year, this "marginal buyer withdrawal" exacerbated declines and volatility.
He also referenced the selling pressure stemming from events like the Yearn Finance hack and macroeconomic concerns, such as the Bank of Japan's interest rate policies. Despite these challenges, Farley expressed optimism about the long-term prospects of the cryptocurrency market, noting that Bullish itself holds 24,000 BTC.
Improvements in Crypto Security and Infrastructure
Farley acknowledged that while the period of 2021-2022 saw a succession of hacking and fraud incidents, causing him considerable hesitation, significant progress has been made in the field of security in recent years. He stated, "But that number has dropped dramatically. Six months ago, my team and I looked at each other and said, 'It really feels like an institutional asset class now.'"
He further pointed out the increased reliability of centralized exchanges and the robustness of custody providers. "Major hacks are much less frequent; the infrastructure has reached a battle-hardened level," Farley remarked. Nevertheless, he cautioned that security risks continue to be the most significant threat facing crypto companies, and underestimating their severity would be a serious misstep.