The Fed’s tightening of monetary policy may dampen crypto enthusiasm.
Mike Novogratz, cryptocurrency billionaire and founder of the brokerage firm Galaxy Digital, believes that bitcoin could find a bottom at the $38,000-$40,000 level, according to Bloomberg.
This is an about face from a few weeks ago, when he said bitcoin could hold at about $42,000.
Like all cryptocurrencies, bitcoin is inherently volatile and prone to big gains and losses. After hitting record highs in November, bitcoin was down today at 2% from the day before, and “at one point sunk to as low as $42,496, reaching the lowest level in more than a month,” according to CNBC.
Ethereum and solana also saw similar drops.
The drop was attributed to the release of minutes from the Federal Reserve Boards’s December meeting, in which “the central bank indicated it would dial back its supportive monetary policy, including reducing the amount of bonds it holds,” according to CNBC, and may have to raise interest rates.
This move could, in theory, bring the stock market back to place similar to what it was before the pandemic hit, and thus dampen some investors’ enthusiasm for crypto.
Lone Cryptowolf
Novogratz told CNBC he’s going to wait a while to buy any more crypto, as he believes the market for bitcoin and other such currencies will be bullish for the next few weeks.
The ongoing speculation about the impending tightening of monetary policy has made risky assets like crypto less attractive to some investors, and is thus affecting demand.
But he said that’s just the short term, as he maintains he’s still ride or die for cryptocurrencies. He recently got a tattoo inspired by the coin terra ($LUNA), and got some bitcoin ink in December 2020.
