- Mike Novogratz believes it’ll take longer than he previously expected for bitcoin to hit $500,000.
- Federal Reserve rate hikes have suppressed the token’s value this year, the Galaxy Digital CEO said.
- Novogratz had previously predicted bitcoin would hit $500,000 within five years.
Bitcoin now faces a tougher path to eventually reaching $500,000, according to Mike Novogratz — with the Galaxy Digital chief executive backing down from his previous prediction that the token would hit that level within five years.
Novogratz said in a recent interview that the Federal Reserve’s monetary-tightening campaign led by chairman Jerome Powell has been the key factor that caused bitcoin’s price to plunge 63% to just under $17,000 this year.
“The biggest change that has happened and the real reason bitcoin went down from $69,000 to near $20,000 is that Jay Powell decided to find his central banking superpowers and start bashing inflation over the head with a series of rate hikes,” Novogratz added.
The Fed has raised interest rates by an outsized 75 basis points at each of its last four meetings in a bid to crush inflation, which hit forty-year highs before easing modestly to 7.7% in October.
That has weighed on economic growth and tech stocks as well as digital assets — which are now mired in a brutal slump that some have labeled a crypto winter.
The industry has also faced a string of high-profile bankruptcies including asset manager Three Arrows Capital, lending firms BlockFi and Celsius and Sam Bankman-Fried’s exchange FTX, which collapsed last month after suffering a solvency crisis.
Those implosions won’t weigh on bitcoin’s long-term price, according to Novogratz.
“The Fed’s in control and they’re doing a darn good job and that’s the main reason why crypto went down,” he said. “The rest of this malarkey that we’ve had between Three Arrows and BlockFi and Celsius and all these companies that were either poorly run or fraudulently run certainly is hurting the overall confidence in crypto.”
“But this too shall pass – they will be brushed off into the dustbin of history and the industry itself is going to emerge having learned lessons and you’re going to see the price take back off,” Novogratz added.