Gary Bode: Bitcoin's 50% drop is not a system crisis

Former fund manager Gary Bode believes that Bitcoin’s nearly 50% decline from recent highs is consistent with the history of deep corrections but is usually only temporary rather than a sign of systemic crisis.

According to Bode, the market may have overreacted to the nomination of Kevin Warsh for the Fed Chair position, with concerns that tightening policies make non-yielding assets like Bitcoin less attractive. Margin call pressures and profit-taking by large holders have amplified the sell-off, while he notes that market perception is more important than fundamentals in this downturn.

Bode admits that whale selling activity and strategy-related pressures could cause short-term stress, but views this mainly as profit-taking. The rise of “paper Bitcoin” such as ETFs and derivatives could also impact prices in the short term, but do not change the limited supply of 21 million BTC — a key factor for long-term investment thesis.

He believes that volatility is an inherent characteristic of Bitcoin, and investors who have accepted this volatility in the past often achieve significant long-term gains. Overall, Bode states that large price swings do not necessarily reflect systemic risk but are a natural part of Bitcoin’s market structure.