It’s a Clean Market, and Bitcoin Isn’t Going Away. Here’s What You Can Expect From 2023 (Mike Novogratz)
To help find your investing answers look at what Crypto businesses are doing.
Source — Mike Novogratz Commons Image
When a Billionaire publicly predicts the financial market, their words tend to carry more weight.
You take them seriously.
It’s important to remember that no one can predict the future with certainty. Everyone’s just making educated guesses and offering their reasoning for why they believe things will improve or worsen.
Mike Novogratz is a former Goldman Sachs employee who left the company due to his partying habits.
He’s also known for his Bitcoin and Luna tattoos but regrets the latter, as Luna famously capitulated to zero before the ink could dry on his arm.
Novogratz has been vocal about his investments in cryptocurrency and even claimed that 20% of his net worth is in Bitcoin and Ethereum.
He’s the CEO of Galaxy Investment Partners, a company specialising in cryptocurrencies. The company is one of the few publicly sharing its financial results in the industry.
However, during the first three-quarters of trading, Galaxy Investment Partners incurred a loss of $136 million from its cryptocurrency trading activities.
According to Novogratz, the reason for the recent sell-offs in the cryptocurrency market is the Federal Reserve’s decision to raise interest rates aggressively to control inflation.
He believes this aggressive approach has led to a decline in not just Bitcoin but other assets.
However, he also thinks that Bitcoin has held up better than other assets and predicts that the market will bounce back once the interest rate hike ends.
Mike Novogratz:
“When the Federal Reserve shifts their approach, it’s likely that all assets will experience a rebound, as we’ve seen a significant decline across the board due to the Fed’s hawkish attitude.
It’s important to note that during a period of inflation, Bitcoin saw tremendous growth, rising from $10,000 to $70,000.”
Source — Yahoo Finance Interview.
Bitcoin Will Rally When Interest Rates Drop
According to Novogratz, if the Federal Reserve stops increasing interest rates, we can expect a rally in the Bitcoin market. However, he’s still figuring out exactly when that will happen.
Novogratz says it’s understandable that CEOs like Brian Armstrong at Coinbase are making decisions to cut costs and let thousands of staff go to survive the current market conditions.
He says the outlook for the cryptocurrency market could be more positive, but it’s also not dire.
There are regulatory challenges that didn’t exist before, but it gives us time to heal and change the narrative.
Novogratz says the good news is crypto isn’t going away.
The prices of Bitcoin and Ethereum have remained steady and have even gone up recently.
He also says the market is relatively “clean right now”.
Mike Novogratz:
The outlook for crypto is not horrible, but it’s not great.
We’ve got regulatory headwinds that we didn’t have before. We’ve got time to heal and rebuild the narrative, so people will cut costs and survive this transition period.
Crypto is not going away.
What’s been interesting is the price of Bitcoin and Ethereum has held pretty steady over the last few months.
It’s actually gone up in the last few days. If you had to sell, there was a lot of bad news out there, you sold.
If you were leveraged, you got out of your leverage.
And so it’s a pretty clean market right now.”
Novogratz mentions that his company, Galaxy Investment Partners, is still heavily invested in cryptocurrency, even with some setbacks.
As an example, they recently acquired a Bitcoin mining facility in Texas.
Mike Novogratz:
“We’ve bought a large mining facility in Texas. We bought GK8, a self-custody company in Israel. We’re leaning in where we think it’s appropriate, but we’re also sober understanding that ’23 is a year you want to survive.”
Final Thoughts
No one can accurately predict the future.
Anything can happen.
A few days ago, FTX recovered $5 billion from the $ 9 billion owed to customers, which offered the Cryptocurrency market some relief.
It’s something I wasn’t expecting.
You might’ve been surprised by the news and the slight recovery too.
People change their perspectives all the time.
Mike Novogratz, in September, believed the deleveraging that happened meant that most people who needed to sell off and deleverage sold, but the prices continued to tumble.
Mike Novogratz (September 2022)
“The bear case is we have 2–6 months left of this pain, and the bull case is the market starts breaking.”
We’re seeing a lot of this breakage in crypto and the rest of the world”.
“You could see prices much more muted.
Things take off when there’s a good story and then come back again.
There are a lot fewer sellers but also a lot fewer new buyers”.
Novogratz has made predictions about the cryptocurrency market in the past, but not all of them have come true.
Some have turned out to be surprisingly accurate.
The market constantly fluctuates, which makes it hard to predict with any certainty.
You should take note of what cryptocurrency companies are doing with their workforces to give you some indication of how to manage your risk when investing.
They’re all battening down the hatches and in survival mode.
I think it’s always wise to do your OWN research because it’s better to succeed or fail based on your actions and decisions.
Dying on your sword is how you get pattern recognition to go deeper or avoid pain the next time.