Mike Novogratz, the CEO and founder of Galaxy Digital, is actively investing in cryptocurrencies. Recently on a CNBC broadcast, he discussed the potential date when cryptocurrencies could start to rise. In his last interview, the renowned billionaire predicts that the Federal Reserve will start lowering the interest rates that have been raised since last March to control inflation, potentially starting in October.
Novogratz argues that the Fed’s interest rate cuts will trigger the rise of Bitcoin (BTC), Ethereum (ETH), and other cryptocurrencies. Interest rate cuts inject liquidity into financial markets, and bull seasons in risk markets typically begin with these cuts.
If what I think will happen does happen and we see a real slowdown in the second half of the year, the Fed will be cutting rates by October, and crypto will take off.
If we should consider what the Fed Chairman has said, the decrease will begin within 9-12 months. If the peak is reached this month, we might see a reduction in the first or early second quarter of next year. If we look at past data, the decrease starts six months after the announcement of the interest rate ceiling. However, FedWatch suggests that reductions will begin in the last quarter of this year, reflecting market sentiment. Regarding this, Powell had commented,
The market expects inflation to fall faster than we do. Therefore, they are expecting an interest rate cut before the end of the year. No rate cuts before 2024.
However, today, many Fed members suggested that an interest rate increase in June could be bypassed and then, if necessary, increased again. But Powell was saying quite the opposite earlier this year.
We will not raise interest rates once we have stopped raising them. That’s why we’re being cautious. We have the tools to solve the problems caused by excessive tightening, but the cost of premature easing would be too heavy for our economy. We will not repeat the mistakes of the past.
While the Fed may seem contradictory, we should interpret these inconsistencies as temporal necessities since the messages given are as effective on the market as the rate increases.
Lastly, regarding why he expects a cut, Mike commented,
The US economy will slow down. All these interest rate hikes will have an impact. The banking crisis will stop lending to small businesses, and this will eventually show itself in unemployment. It’s just going to take some time. I think the Fed will be talking in a very different tone in October, and this will be a catalyst for the rise of assets, especially gold, silver, Bitcoin, and Ethereum.
Meanwhile, business bankruptcies have visibly increased. Fed members say they are starting to see the consequences of interest rate hikes. Let’s hope Mike is right.