Leading Crypto Analyst Says Market is Near Bottom

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Galaxy’s Mike Novogratz says Bitcoin should be around $20,000.

Key points

  • Novogratz believes that Bitcoin and Ethereum may not have much further to fall.
  • The crypto insider believes that we could see a recovery in the last quarter of this year.
  • The Federal Reserve’s attempts to curb inflation will continue to have a big impact on prices.

June has already been a dramatic month for crypto investors, and not in a good way. Bitcoin (BTC) fell to its lowest point in 18 months. The total crypto market capitalization fell below $1 trillion, down $2 trillion from its peak last November.

We have seen some tentative gains today but there is still a lot of uncertainty and the cryptocurrency market has a long way to go before we can really talk about recovery. Still, some industry insiders believe the end could be in sight.

Crypto analyst says rock bottom could be near

Galaxy Digital Holdings founder and CEO Mike Novogratz has previously warned that choosing funds from the market is “dangerous.” Last month he noted on Twitter that the cryptocurrency crash of 2018 had seen even bigger losses, saying investors should slowly scale up.

However, this week he told the Morgan Stanley Financial Conference that he thought Ethereum (ETH) and Bitcoin would not need to fall much further. “Ethereum should be around $1,000 and it’s $1,200 right now. Bitcoin is around $20,000, $21,000 and $23,000,” he said.

Both Ethereum and Bitcoin remained above their respective $1,000 and $20,000 marks in recent days, despite dramatic price declines across the board. Novogratz also said that he thought cryptocurrencies were closer to the bottom than stocks, which he believes could fall another 15% to 20% further.

For Novogratz, the Federal Reserve holds the key to recovery. The Federal Reserve is attempting to rein in runaway inflation without triggering a recession and its economic tightening measures have been one of the main reasons for recent cryptocurrency price struggles. People are moving away from riskier assets like cryptocurrencies as the economy tightens.

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The CEO of Galaxy tweeted that Bitcoin will lead the next rally when the Fed “wobbles” and good projects will follow suit. For those worried that the recent crisis could spell the end for cryptocurrencies, Novogratz noted that it’s not easy to bring about change, but said, “This industry is not going to go away.”

Novogratz expects we will see a change in the fourth quarter

While Novogratz does not see major cryptos falling much further, he also thinks it could be some time before prices start to actively recover. He told CoinDesk’s Consensus 2022 conference last week that he expected the economy to slow enough for the Fed to “take its foot off the brake” in the final quarter of this year.

That gives the Fed a few months to rein in runaway inflation. Yesterday he announced a 0.75% rise in interest rates, the biggest since 1994. He warned that we can expect another giant rate hike next month, unless consumer prices fall before then. The initial reaction to the news was positive in crypto land, with a slight increase in prices. But until inflation is under control and central banks ease their tightening measures, it is hard to see how cryptocurrencies will make any kind of meaningful recovery.

Bottom line

Crypto investors are understandably eager to see the end of the pain. Many have seen the value of their portfolios decimated in recent months, especially those who bought for the first time last year. In this light, Novogratz’s cautious optimism is reassuring. He is not predicting that prices will go up tomorrow, but he is also not a skeptic telling us that the crypto sky is falling.

That said, if you are considering buying crypto today to benefit from a future rally, be aware that prices could still fall further. There are still several clouds on the crypto horizon, such as more potential economic problems, increased regulation, or a collapse in decentralized finance. Cryptocurrencies are high-risk assets, and it is crucial that you understand the risks and only invest money that you can afford to lose.

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