Galaxy Digital’s Mike Novogratz Explains Why Bitcoin, Cryptos Are Rallying
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Galaxy Digital CEO Mike Novogratz said markets are pricing in a Fed rate hike slowdown and a US credit crunch.
In an interview with CNBC, he said recent bank failures “re-galvanized” crypto’s original use case.
Galaxy Digital CEO Mike Novogratz said the latest cryptocurrency market rally is a nod to trader speculation on a slowdown in central bank tightening and a looming US credit crunch.
In an interview with CNBC, the long-time bitcoin bull also said the upswing in token prices highlights crypto’s initial use case as a haven from government monetary policies like the Federal Reserve’s interest rate hikes and the risks of holding funds in the traditional banking system.
Bitcoin’s white paper, a document which states its intended purpose, was released around the time of the Great Financial Crisis in 2008, out of a “distrust of centralized governments [and] banks,” Novogratz told CNBC.
And today, the recent failures of specialist lenders like Silicon Valley Bank as well as fears of a looming credit crunch have “re-galvanized that original story,” he added.
“We’re heading into a credit crunch in the United States… Assets that will do well in a slowdown are telling us something,” the former Goldman Sachs partner said of bitcoin, ethereum, and gold.
“We’re having a pretty constructive rally based on a bunch of things… The market is pretty certain that [Fed] Chairman [Jerome] Powell is finished or close to finished,” he continued, referring to optimism that tightening will end soon.
To be sure, bitcoin proponents often tout it as an inflation hedge. The crypto’s price, however, has been extremely sensitive to the Fed’s actions, with views for tighter policy hitting crypto and other risk assets while views for looser policy boost those assets.
Cryptos have been mostly trending upward since the start of the year. Bitcoin and ether are up 68% and 37% in the past three months, respectively. Bitcoin notched a 10-month high on Tuesday, shooting past $30,000, according to Messari.
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