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In an interview, CEO of Galaxy Digital Mike Novogratz puts his thoughts on the ongoing market crash
When the market takes extreme paths, either going upwards or downwards, statements of analysts and crypto experts bring clarity for investors on what to expect further. Although no one can predict the next move of an uncertain and volatile market, a piece of advice is always better than following an unconventional plan without experience or guidance. Amidst the ongoing market crash, many crypto experts and analysts, including Mark Cuban, Peter Brandt, Arthur Hayes, and others, had put their thoughts.
Now after the interest rates hike of 0.75% by Federal Reserve Chairperson Jerome Powell, billionaire Mike Novogratz also asked for his views regarding the crypto market and ongoing situations. Mike Novogratz is known to be the former hedge fund manager and Founder and CEO of tech-driven financial services and investment management firm Galaxy Digital.
In an interview with Bloomberg on Wednesday, Novogratz commented that investors would need to hold their Crypto, given what’s happening in the market on a macro level. He said that this year, there were headwinds as the Fed has decided to withdraw liquidity from the market, resulting in diminishing assets that have no actual use case or relevance but still existed based on cheap money.
Galaxy Digital CEO said that the worst part of this move in terms of Crypto is that several players had leverage that is more than what people think they have. Citing an example of what happened with Long Term Capital Management in 1998, Novogratz compared crypto lending platform Celsius and venture capitalist firm Three Arrows Capital given both have been seen to witness a drop in their activities.
According to Novogratz, when the so-called neutral players in the market hold massive leverage, this creates a lot of fear around the space. This resulted in credit withdrawal in huge volume from the market, and it eventually resulted in the price collapse.
While mentioning bitcoin and ethereum, a former hedge fund manager said that many companies could experience bankruptcy proceedings further in case of leverage getting out of the system. If it happens, Novogratz suggests that people would need to see bitcoin at $20,000 and ethereum at the $1,000 level. He further said that given the current situation, Crypto is going to take time to gain its narrative back and take investors’ confidence back.