Billionaire investor Mike Novogratz says the record-breaking crypto rally shows a lack of confidence in the Fed – and cites central bank uncertainty as the reason behind Bitcoin’s recent surge | Currency News | Financial and business news
Mike Novogratz, CEO of Galaxy Digital.
REUTERS / Rick Wilking
- Billionaire Mike Novogratz said Thursday that Bitcoin is serving as a “report” on the performance of the Fed and other global financial institutions.
- Bitcoin’s surge was fueled by “mass adoption” and people were “less afraid of monetary and fiscal policies,” he said.
- Galaxy Digital’s CEO suggested buying Bitcoin and Ethereum.
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Billionaire Mike Novogratz said Thursday the surge in cryptocurrencies was a referendum on the Federal Reserve’s perceived ability to manage the risks of the world’s largest economy and suggested continuing to buy bitcoin.
The US economy is currently recovering from the COVID-19 pandemic. The growth is being helped in part by the federal tax aid granted by the government during the health crisis of $ 5 trillion. The stimulus is widely expected to drive consumer price inflation past the central bank’s 2% target. The Fed has announced that it will tolerate higher inflation for a while to accommodate growth.
There is a “slim chance” that the Fed can “land the plane” and avoid a massive spike in inflation / debt default, Novogratz said Thursday.
“The crypto markets are telling us the chances are they won’t be able to land the plane,” the billionaire told the New York Alternative Investment Roundtable, a nonprofit that promotes best practices and education in the alternative investment industry.
“Bitcoin is a report on how central banks and finance ministers are doing,” added the CEO of Galaxy Digital.
According to Novogratz, Bitcoin has got two main drivers under control: “Mass adoption, and people are less afraid of monetary and fiscal policies.”
Bitcoin was trading around $ 53,000 on Thursday after rising to nearly $ 65,000 last week on the same day that the Coinbase cryptocurrency exchange debuted on the Nasdaq.
Novogratz’s comments landed on the same day that ether, the second largest cryptocurrency, hit a new record high of over $ 2,560 and increased its market cap to $ 300 billion for the first time.
“Simple advice: buy Bitcoin, buy Ethereum, and then do your homework on some stocks,” he said. He doesn’t like crypto mining stocks because “it’s just bitcoin deferred,” but he understands the demand when people want to get in.
Novogratz previously fought the Federal Reserve, claiming it sparked a boom in speculative assets like so-called meme stocks like GameStop by lowering interest rates, which resulted in cheap borrowing and made saving less attractive.
“All of this is happening because interest rates are zero,” Novogratz said on CNBC’s “Squawk Box” this week.