Bitcoin and cryptocurrency prices have risen over the past year, in part due to the US Federal Reserve’s policy of ultra-low interest rates and massive cash injections into the financial system.
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Federal Reserve Chairman Jerome Powell, who was nominated last week for another four-year term by President Joe Biden, has overseen the largest monetary stimulus program in US history to help offset the catastrophic economic effects of the Covid-19 pandemic — as bitcoin and crypto prices boom. . With the stock market and many other assets.
Now, billionaire crypto investor Mike Novogratz has warned that Powell could lead to a Bitcoin and crypto market crash in 2022 as he works to curb hyperinflation that has jumped to a 30-year high.
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“We have inflation that is showing, you know, in very bad ways in the United States,” said Novogratz, CEO of Bitcoin and crypto-focused financial services company Galaxy Digital. CNBCAnd He asks, “Will the Fed have to move a little faster” to rein in higher rates?
“This would slow down all the assets. It would slow down the NASDAQ
After cutting interest rates and launching massive stimulus programs at the start of the pandemic, central bankers around the world are under increasing pressure to act in the face of rising inflation.
In recent weeks, the Fed has scaled back its bond purchases, as the minutes of its latest monetary policy meeting revealed that officials are considering further scaling back quantitative easing measures.
Novogratz also warned that “people are getting too bearish” on bitcoin and the cryptocurrency after the massive rallies over the past year, with the price of bitcoin up nearly 200%, the price of ethereum up 600% and the likes of ethereum competitors Solana, BNB from Binance and Cardano hitting several thousand. percent.
Meanwhile, watchers of the bitcoin and crypto markets echo Novogratz’s concerns.
“[Last week we had] Additional evidence that bitcoin is behaving more as a risk asset than an inflation hedge comes in the form of a sharp rally when news broke that Biden had decided to re-nominate Jerome Powell — gold slumped, by contrast,” Noel Acheson, head of market insights at broker Genesis. Digital, he said in the comments via email.
“This ties bitcoin to expectations of real interest rates which, if they remain low or even negative in the short term, will support further growth in risk assets. The danger is that real interest rates could rise to a level that begins to suffocate from growth and liquidity as it reaches asset valuations in the broader market while providing a more attractive alternative.”
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However, despite the warning about the price of bitcoin, ethereum and other cryptocurrencies, Novogratz expects Wall Street and other major financial institutions to continue to integrate into the bitcoin and cryptocurrency market after this year’s scramble for space.
“The scale of organizations that Galaxy sees moving into this space is staggering,” Novogratz said. A recent Nickel Digital Asset Management survey found that 82% of institutional investors and wealth managers plan to increase their exposure to cryptocurrency through 2022 and into 2023.
“I was on the phone with one of the largest sovereign wealth funds in the world today, and they made the decision based on going forward to start investing money in crypto,” Novogratz added. “I’ve had the same conversations with the big US pension funds.”