The price of bitcoin and the cryptocurrency has risen over the past year, partly due to the US Federal Reserve’s ultra-low interest rate policy and massive cash injections into the financial system.
Subscribe to Businesshala’ cryptoasset and blockchain advisory and discover new NFT and crypto blockbusters ready for 1,000% profit.
Fed Chairman Jerome Powell, who was nominated for another four-year term by President Joe Biden last week, launched the largest monetary stimulus program in US history to help offset the devastating economic effects of the COVID-19 pandemic. Has overseen – along with the uptick in bitcoin and crypto prices, as well as the stock market and many other assets.
Now, millionaire Crypto investor Mike Novogratz has warned that Powell could trigger a bitcoin and crypto market recession in 2022 as he works to halt runaway inflation that jumped to 30-year highs.
Sign up now for free cryptocodexA daily newspaper for the crypto-curious. Every workday, helping you understand the world of bitcoin and crypto
“We know that inflation in the US is looking very poorly,” said Novogratz, chief executive officer of Galaxy Digital, a bitcoin and crypto-focused financial services company. CNBC, Asking: “Will the Fed move a little faster” to curb higher prices.
“It will slow down all assets. It will slow down the Nasdaq
Central bankers around the world are under increasing pressure to act against rising inflation, after slashing interest rates and launching massive stimulus programs at the start of the pandemic.
In recent weeks, the Fed has reduced its bond purchases, with minutes from its last monetary policy meeting showing that officials are considering further easing its quantitative easing measures.
Novogratz also warned that “people are getting very bearish” on bitcoin and cryptocurrencies, following last year’s massive rally that saw the price of bitcoin nearly 200%, the price of ethereum 600% and ethereum rivals Solana, Binance’s BNB and with choice. Cardano up several thousand percent.
Meanwhile, other bitcoin and crypto market watchers have echoed Novogratz’s concerns.
,[Last week we had] Further evidence that bitcoin behaves more like a risk asset than an inflation hedge came in the form of a sharp uptick when news broke that Biden had decided to re-name Jerome Powell – by contrast, gold. was dropped,” Noel Acheson, head of market insights at digital prime broker Genesis, said in the emailed comments.
“This ties bitcoin to a real interest rate perspective, which, should it remain low or even negative in the short term, will favor further growth in risk assets. The risk is that real interest rates will rise to that level. which may begin to choke off growth and liquidity, impacting asset valuations in the broader market while providing more attractive options.”
However, despite warnings on the price of bitcoin, ethereum and other cryptocurrencies, Novogratz expects Wall Street and other major financial institutions to continue to pile on the bitcoin and crypto market after the space stampede this year.
“It’s staggering to see the number of entities that the Galaxy sees moving into this space,” Novogratz said. A recent survey by Nickel Digital Asset Management found that 82% of institutional investors and wealth managers plan to increase their cryptocurrency exposure by 2022 and 2023.
Novogratz said, “I was on the phone today with one of the largest sovereign wealth funds in the world, and they have made a decision based on the way forward to start pouring money into crypto.” “I’ve had similar conversations with large pension funds in the United States.”