The view that Bitcoin will begin a strong uptrend as soon as the FED reconsiders its policy of raising interest rates was expressed by Mike Novogratz, founder of the asset management firm, Galaxy Digital.
“Bitcoin will lead the markets the moment the Fed backs off its policy of raising interest rates… that’s when you’ll see Bitcoin explode,” Novogratz said in a recent interview with CNBC.
As tech stocks declined due to the broader market downturn, Bitcoin found itself at price levels last seen in late 2020.
The cryptocurrency space has taken a number of hits in recent times, including the fall of LUNA – UST, the cessation of withdrawals on the major cryptocurrency lending platform, Celsius, rising inflation in the world’s leading countries and the Fed’s policy of raising interest rates.
In fact, the last rate hike by the Fed, of 0.75%, was the largest in 28 years, and Goldman Sachs economists expect another 0.75% hike next July.
Investors remain cautious
The Fed’s decision to raise interest rates has sparked fears of an impending recession, while for his part Novogratz believes investors will not rush to switch to risky assets such as Bitcoin:
“A lot of investors I talk to believe that the next time they will connect to Bitcoin will be when they start to feel that the Fed will stop raising interest rates,” the Galaxy Digital leader said, adding: “as long as the Fed follows this policy, it’s hard for any risk asset to do very well.”
Last month, Novogratz, who earlier this year described himself as “LUNAtic” and had a LUNA tattoo on his body, expressed his frustration at the collapse of the LUNA and UST ecosystem of Terra, in which Galaxy had invested over $400 million.
Despite diversifying his portfolio, the investor still admits that the current cryptocurrency collapse is “more painful” compared to previous bear market cycles as “This is definitely more painful because the numbers are bigger,” Novogratz said.