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With Bitcoin now under $45k support that it held for weeks, market sentiment is in the gutter. However, Mike Novogratz thinks the price will bottom out soon within the $38k to $40k range. He believes institutions are likely interested in buying the dip within that range.
Institutions and Inflation
Novogratz expressed his current view of the market in conversation with CNBC’s Squawk Box on Thursday. He said that he knows “big institutions” that are preparing to put positions on Bitcoin, who see $38k as an attractive buy level.
“On the charts, $38k to $40k seems like where we should bottom,” said the Galaxy Investments CEO.
For almost all of December, Bitcoin remained range-bound roughly between $45k and $50k. That pattern broke yesterday, with the price plunging below $43k following a liquidation cascade. Ever since, The Bitcoin fear and greed index has reached lows it hasn’t seen since July – when it briefly dipped below $30k.
Novogratz also suspects that we may be going into a “paradigm shift” regarding interest rates.
“We’ve had this philosophy that the Fed’s gonna keep rates low forever… we’re in this liquidity bubble. Even now they’re gonna raise rates to 2% over 2 years and continue to buy treasuries for a while,” he said.
Part of what sparked yesterday’s market fall was resurging concerns around the Fed raising rates to combat inflation. The stock market was hit as well, with the S&P down 3% on the day.
Indeed, Bitcoin has a history of reacting to news about rising and falling inflation. When October’s record-high inflation numbers were released two months ago, Bitcoin shot to an all-time high of $69k. News that interest rates could rise, however, are typically bearish for the asset.
“If inflation doesn’t come down like the Fed thinks [it will], all bets are off,” he concluded.
Retaining Bullish Optimism
While the markets are down right now, the long-term outlook on Bitcoin still appears enthusiastic. Max Keiser – host of the Keiser Report and avid BItcoin maximalist – sees the asset hitting $220k by the end of the year. Meanwhile, Nexo Founder Antoni Trenchev could see it at least touching $100k.
Certain on-chain metrics show positive long-term signals as well. The network’s hash rate is at an all-time high and continues to rise, as does the illiquid Bitcoin supply. Importantly, the latter has not fallen despite declining prices over the last few months, unlike the crash last May.