Bitcoin and cryptocurrency prices have fallen sharply over the past week, with the combined cryptocurrency market now down nearly $1 trillion from its November peak (even as Wall Street giant Goldman Sachs issued a massive bitcoin price prediction).
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The price of Bitcoin is down about 10% since the start of 2022, dropping to $40,000 from a high of $70,000 late last year. Meanwhile, other major cryptocurrencies such as BNB, Solana, Cardano, and XRP from Binance have also crashed, all of which have lost double-digit ratios in the past week.
Now, as traders desperately look for signs of an end to the sell-off, bitcoin and crypto billionaire Mike Novogratz said he doesn’t expect bitcoin to drop further — describing the price dip below bitcoin’s lows this week at $40,680.
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“On the charts, $38,000, $40,000 looks like where we need to be,” said Novogratz, CEO of crypto investment management firm Galaxy Digital. CNBCNoting “a huge amount of institutional demand on the sidelines.”
“I know the big institutions that are in the process of placing positions at them, so I think they will see these levels as attractive to buy,” Novogratz, a Wall Street veteran who jumped into bitcoin and cryptocurrency in 2017 after long spells, said in Fortress and Goldman Sachs.
Wall Street giants and institutional investors have flocked to the cryptocurrency markets since 2020 as digital assets grab the attention of traders. The price of Bitcoin has risen about 400% over the past two years, with smaller cryptocurrencies such as Ethereum and Solana posting larger gains.
However, bitcoin and cryptocurrencies remain highly volatile, delaying many large investors despite some predicting that bitcoin will win market share of gold as a store of value over the next few years.
The price of Bitcoin fell sharply this week after the Federal Reserve released the minutes of its December meeting where officials discussed the possibility of raising interest rates earlier and faster and shrinking the Fed’s massive balance sheet in order to rein in high inflation.
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Bitcoin price dropped to lows of just over $40,000 per bitcoin this week before rebounding, and has now risen to over $42,000. Ethereum price also bounced off this week’s lows, helping the price of its smaller rivals BNB, solana, and cardano from Binance higher. Ripple XRP is also up.
“We have this philosophy that the Fed will keep interest rates low forever and yet, they will raise rates to 2% over two years gradually and they will continue to buy Treasuries for a while,” Novogratz said. “So we’re in this liquidity bubble.”
Novogratz also warned that if the Fed fails to deal with inflation, the situation could spiral out of control.
“If inflation doesn’t go down as the Fed thinks, all bets are off,” he said.