On Tuesday (September 20), billionaire investor Mike Novogratz was asked to share his thoughts on the crypto market.
Former hedge fund manager Novogratz is the Founder and CEO of Galaxy Digital, “a technology-driven financial services and investment management firm that provides institutions and direct clients with a full suite of financial solutions spanning the digital assets ecosystem.”
Novogratz’s comments were made during an interview with Andrew Ross Sorkin on CNBC’s “Squawk Box”.
According to a report by The Daily Hodl, Novogratz had this to say about Ethereum and Bitcoin:
“Ethereum has had a pretty big move down. We had the merger. The merger was an amazing accomplishment in lots of ways, right? It shows that a decentralized community can accomplish something that’s really complicated. And so I think we’ll look back on that as something really significant. You know, Ethereum had gone from $1,000 to $2,000. And so now you’ve had a real big pullback. It feels like $1,250 should be the bottom here and so I think you’re closer to the bottom than the top...
“There’s a put in Bitcoin somewhere because you just see these institutions all getting engaged slowly. And so when I see this adoption when I see BlackRock doing a deal with Coinbase and their own fund… you just know people are coming to buy and so, you know, could Bitcoin go lower? Of course, it could but I don’t think there’s a catastrophic fall...
“You’d be more neutral here and you’d be waiting to see the Fed pivot. And then I think you are going to see a big, big rally in crypto.”
Yesterday, at the press conference following the conclusion of the two-day FOMC meeting, the Fed announced that it was raising the federal funds rate by 0.75%, and Fed Chair Jerome Powell had this to say at the press conference:
“My colleagues and I are strongly committed to bringing inflation back down to our 2 percent goal… At today’s meeting the Committee raised the target range for the federal funds rate by 3/4 percentage point, bringing the target range to 3 to 3-1/ 4 percent… As shown in the SEP, the median projection for the appropriate level of the federal funds rate is 4.4 percent at the end of this year, 1 percentage point higher than projected in June. The median projection rises to 4.6 percent at the end of next year and declines to 2.9 percent by the end of 2025, still above the median estimate of its longer-run value.“
On JUne 16, after the previous time that the Fed hiked interest rates by 0.75%, Novogratz talked about the crypto market during an an interview on Bloomberg TV’s “Bloomberg Markets: The Close“, where he talked to Sonali Basak, Caroline Hyde, Romaine Bostick, and Taylor Riggs.
“You have to hold crypto in context of what’s gone on macro… there were going to be headwinds this year because the Fed was going to have to withdraw liquidity, and so assets that went up based on cheap money forever — if they’re growth stocks, or expensive watches, or crypto — were certainly under pressure all year long.
“What’s exacerbated this move in crypto is a bunch of leveraged players that had far more leverage than I think people thought… And so you talk about Celsius or Three Arrows Capital… that’s caused almost something similar to what happened in 1998 with Long Term Capital Management… Alleged market neutral players with monster leverage that’s being unwound and that’s created a ton of fear in the space. And so you see lots of credit being withdrawn from the space, and when credits are withdrawn you’ve seen prices collapse…
“I look at the US stock market. It looks like it’s got probably 4% more to go to 3500, which is where the 200-week moving average is, where support comes in, and I think you’re seeing this liquidation of risk and cryptos’ got caught up with it.“
“My guess is leverage has been knocked out of the system, but Humpty Dumpty doesn’t get put back together right away. It takes a while to kind of sort through. There’ll be bankruptcy proceedings in many companies, and so I think while we should bounce off of $20,000 [for $BTC] and bounce off of $1,000 [for $ETH]it’s gonna take a little while for crypto to regain narrative, regain confidence…
“I 100% think there are people on the sidelines waiting to build, but I think the first buyers from the traditional sense are going to be global macro hedge funds. The moment the Fed flinches and says ‘we raised enough, we can’t do it anymore’, I think you’ll see lots of traditional macro funds who’ve had a great year buying Bitcoin. We’ll add to our position at that point…
“Guys who have done this for a long time realize the soft landing is impossible. And so, the economy is going to go into recession. It’s gonna go into a recession fast… You’re going to see the economy just screech to a halt. That’s what the Fed needs to do to get inflation down. And so, we’re going to go through this awkward period where growth is going to be rolling over and inflation is still going to stay stubborn before it rolls. When the Fed sees it rolling and they signal the pause, then you’ll see crypto take off. You’ll see other assets follow.“
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