Mike Novogratz, Founder and CEO of Galaxy Digital, shared his thoughts on the current situation in the market. According to Novogratz, the crypto space will not see a breakout in the bear market until the US Federal Reserve (FED) is forced to pause its aggressive cycle of rate hikes aimed at containing inflation. Here are the details…
Mike Novogratz: Cryptocurrency bear market is yet to break
Novogratz during a panel discussion titled “Lessons Learned While on the Crypto Rollercoaster” at the Consensus 2022 conference in Austin this week, “Bitcoin and crypto will not trade at good levels until the Fed gives up.” Novogratz said on Friday that to get results on inflation, the Fed would need to plunge the economy into a deep recession. “This is what Fed Chairman Powell should do. Will he have the courage?” he added.
Novogratz thinks the US economy slowed enough in the fourth quarter, forcing the Fed to step away from the rate hike accelerator. This is when the crypto bear market will start to turn. According to the expert, in this case, Bitcoin will lead the markets by breaking away from stocks. Novogratz uses the following expressions:
You will see Bitcoin bottoming out before stocks. Bitcoin was bought as an inflation hedge. Although stocks are both an inflation hedge and a growth story. So when growth drops, Bitcoin could start to recover. My hope is that by the fourth quarter – September, October or November – the economy will slow down enough for the Fed to say it will stall. Next, you will see the next crypto cycle start.
Novogratz commented on the Terra crash
Looking back, Novogratz said that Powell should have increased rates a full year before it started. Novogratz was also asked about the lessons learned from the collapse of the Terra ecosystem. As we reported on Kriptokoin.com, Galaxy Digital invested in LUNA, the “sister coin” of the stablecoin TerraUSD at the end of 2020. He made this investment using the company’s balance sheet. Novogratz used the following statements:
A lesson I’ve practiced here in my entire career is that we’re in the process of a really early revolution in this technology. You have to have a diversified portfolio, bet on smart projects, monitor usage, make profits along the way, and have some risk management. You need to know the tools and which macro environment you are in.
Novogratz added that he keeps the LUNA tattoo as a reminder of humility. Bitcoin continued to suffer losses on Friday following the release of hotter-than-expected inflation data from the US, which hit a 40-year high of 8.6 percent for May. The largest cryptocurrency was currently trading at $29,140, down 2.6 percent.
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