Bitcoin Won’t Pump Again Until The Fed Cuts Rates, Says Mike Novogratz

Mike Novogratz, CEO of Galaxy Digital, believes that Bitcoin's price action will continue for a long period of sleep until the market “narrative” can rear its head.

This narrative could come in one of two forms: either the central bank cuts interest rates, or regulators clear the air on cryptocurrencies.

Bitcoin needs a new narrative

During one of the companies Earnings call On Tuesday, Novogratz said he believes cryptocurrencies are in a “consolidation phase” after a strong first quarter, and he expects Bitcoin’s price to float between $55,000 and $75,000 until “the next set of market events lift us up.”

“Bitcoin always needs a narrative,” Novogratz explained during an interview. interview With Bloomberg on Tuesday. “If you think of Bitcoin as digital gold, there are always two narratives: one is macro, one is adoption.”

Historically, the price of Bitcoin has been affected by global macroeconomic trends, rising during periods of tight central bank policy, and falling during periods of tighter central bank policy.

At the beginning of the month, Bitcoin fell below $57,000 on concerns that the Fed would signal a longer period of higher interest rates at the upcoming Federal Open Market Committee meeting. While this turned out to be true, the currency recovered after the meeting as the central bank simultaneously promised to slow the pace of quantitative tightening, which was a boon for market liquidity.

The Fed and regulators

Until macroeconomic data changes and inflation starts to decline, Novogratz believes the Fed is “paused,” and so is Bitcoin.

“Until you see this movement in short-term prices here and abroad, and/or more regulatory clarity, Bitcoin will likely trade in a range,” he predicted.

Bitcoin's 50% rise in the first quarter was largely driven by excitement over newly launched Bitcoin ETFs. However, the funds suffered net outflows in the second quarter.

The price of Bitcoin was also halved and the Runes token standard was launched last month, leaving two more narratives behind the leading cryptocurrency asset.

In terms of regulatory clarity, Novogratz does not believe cryptocurrencies are coming after the US federal elections this fall.

As things stand, cryptocurrencies have become a partisan issue in the United States, as the Biden administration favors placing tougher guardrails on the industry. At the same time, Republicans are seeking a more welcoming approach to promoting financial innovation.