Key facts:
The world economy will settle in a way that favors bitcoin, says Novogratz.
Despite that, many companies in the industry may not recover from the current crisis.
For American businessman Mike Novogratz, this “crypto winter” could end in October 2022. Since then, according to him, “bitcoin will break away from stocks and lead the markets.”
So was expressed recently the founder and CEO of Galaxy Digital during his participation in the Consensus 2022 conference. “My hope is that, by the fourth quarter, the economy is slowing enough that the Federal Reserve (Fed) says that we are going to do a pause, and then you will see the beginning of the next cycle of cryptocurrencies,” he said to justify his prediction.
Novogratz, who is also an investor in bitcoin (BTC) and digital assets, is convinced that by then, “the rates are going to be 5% in the United States”. For this reason, he hopes “that cryptocurrencies can be decoupled.”
As CriptoNoticias has shown, BTC has some price correlation with traditional markets, particularly the NASDAQ tech stock index. Already in January of the current year, this medium reported that “bitcoin and traditional markets are dancing to the same rhythm.”
More recently, in mid-May, the correlation with the S&P500 and NASDAQ indices was reported to reach a new all-time high. In the graph below, produced by TheBlockCryptoIt is shown as this correlation, although it has declined slightly since then, remains high:
The cryptocurrency industry would have trouble recovering
Although Novogratz is optimistic about the price of the cryptocurrency created by Satoshi Nakamoto, he suggests that the cryptocurrency industry —which, in general, is not going through a good time— it will be difficult for him to recover. For him, many companies will not be able to survive the current crisis.
This is something that is already beginning to be observed, with a wave of layoffs in companies in the sector. Exchanges Coinbase, Gemini and Bitmex are some of the companies that announced their decision to lay off employees or not to hire more staff at least until the end of 2022.
Also they Latin American exchanges Bitso and Buenbit found it necessary to reduce their staff. Federico Ogue, Argentine businessman and CEO of Buenbit had said at the end of May: “Given a new global context, we are redefining our strategy to become more robust and efficient.”
Galaxy Digital, Novogratz’s company, has not escaped the crisis and its shares (listed under the ticker GLXY on the Toronto Stock Exchange, Canada) fell about 81% of its historical maximum price reached in November 2021.
The businessman predicts that the recovery of the bitcoin market and the industry that has been generated around it, will not be in the form of a “V”. Rather, he predicts a mix of ups and downs and trading ranges until “a new narrative emerges,” which, as mentioned above, could happen in October this year.
In the meantime, Novogratz remains optimistic that, at least for now, his company has not joined the wave of layoffs:
Why do I keep hiring people and am optimistic? Because I see the adoption [de bitcoin y las criptomonedas] in real life.
Mike Novogratz, CEO of Galaxy Digital.