The cryptocurrency market as a whole is undergoing a historic price drop. The crypto selloff accelerated on Thursday, a day after the US Federal Reserve raised interest rates by the greatest in decades, after which investors showed indications of losing faith in digital currencies.
The price of bitcoin is trying to stay above the $20,000 support level, while Ethereum is approaching $1,000. Bitcoin’s price struggled to break through $23,000 after an upward reversal. The majority of altcoins are down by more than 10 percent.
Galaxy Digital CEO Mike Novogratz anticipated that Bitcoin and Ethereum would need some time to restore their optimistic narrative in a recent interview with Bloomberg. As soon as the US Federal Reserve stops raising interest rates, according to Novogratz, global macro hedge funds will start buying Bitcoin.
“You will rebuild a base in price, you will rebuild a story”
The recent cryptocurrency crisis, according to him, was compounded by a slew of leveraged players, including big crypto hedge firm Three Arrows Capital, which apparently failed to fulfill margin calls.
The crypto mogul linked the current situation to the collapse of Long-Term Capital Management, a now-defunct hedge fund. Following its initial success, LTCM lost $4.6 billion in a few months due to the Asian financial crisis of 1997. In 2000, it was liquidated, making it one of the most famous hedge fund failures in history.
He compares the price performance of cryptocurrencies to that of Zoom Meeting, a video conferencing software program. Despite significant losses, he believes that neither crypto nor Zoom will vanish. The US economy is headed for a recession, according to Novogratz, who claims that a “soft landing” is not feasible. He also believes that, in the long run, the correlation between cryptocurrencies and stocks will break down.