Mike Novogratz thinks big hedge funds working with traditional finance will start buying bitcoins after the Fed policy loosens

Galaxy Digital CEO called the conditions for crypto market recovery

17.06.2022 - 15:30

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2 min

What’s new? Mike Novogratz, CEO of investment firm Galaxy Digital, named the conditions for a cryptocurrency market recovery. He believes that major cryptocurrencies will take some time to return to a bullish trend. According to the investor, international hedge funds operating in traditional finance will start buying BTC as soon as the US Federal Reserve System (Fed) stops raising interest rates.

Interview with Bloomberg

What else did Novogratz say? According to the investor, the current decline was aggravated by the plight of some major market players, such as cryptocurrency hedge fund Three Arrows Capital (3AC) - it is reported that several exchanges liquidated its positions due to the inability to repay margin calls.

Novogratz compared the current crisis to the collapse of the now-defunct hedge fund Long-Term Capital Management. After significant success, LTCM lost $4,6 billion in just a few months because of the 1997 Asian financial crisis. It was liquidated in 2000, one of the largest hedge fund bankruptcies in history.

Novogratz believes that the US economy is heading into recession, and a “soft landing” in the current situation is impossible. He also added that the correlation between cryptocurrencies and the stock market could break down in the long run.

Mike Novogratz is an American trader and investor and former head of the Goldman Sachs branch in Latin America. After leaving the firm, he founded his own investment company, Galaxy Digital. It had $3,42 billion in assets under management at the end of 2021.

Novogratz previously predicted that two-thirds of cryptocurrency hedge funds would go bankrupt because of the current market decline. In his opinion, the collapse of cryptocurrency rates is caused by the Fed's policies. The investor also noted that the price of bitcoin could rise significantly if the regulator softens its policy on digital assets.

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