Mike Novogratz says bitcoin won’t have massive rally as Fed hikes rate — Russia-Ukraine war continues

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Mike Novogratz, CEO of Galaxy Investment Partners. REUTERS/Andrew Kelly
Mike Novogratz, CEO of Galaxy Investment Partners. REUTERS/Andrew Kelly
  • Mike Novogratz said in a Bloomberg interview that bitcoin won't have an aggressive rally as the US Federal Reserve hikes interest rates.
  • The boss of Galaxy Digital said higher rates and war in Ukraine has made investors re-evaluate risk assets like bitcoin.
  • Bitcoin surged to all-time highs last year, and although its price now far below those peaks, Novogratz is still bullish.
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Billionaire Mike Novogratz said bitcoin will struggle to forge much of a rally in the current environment. The head of Galaxy Digital said rate rises by the Federal Reserve and the ongoing conflict in Ukraine will limit bitcoin's upside potential.

"I don't think bitcoin can rally aggressively until we get a pause," he said during an interview with Bloomberg. "Bitcoin is a narrative story, it's bringing people into the community. It's hard to bring in new people when their house is on fire."

Risk assets like cryptocurrencies, stocks and a number of commodities surged over 2020 and 2021, thanks to the Fed's policy of pumping billions of dollars into the financial system to keep borrowing costs low in order to fuel economic recovery from the pandemic.

The central bank is now tightening monetary policy, by winding down that stimulus programme and, very soon, by raising interest rates for the first time in years. With that in mind, along with the impact of Russia's war in Ukraine on global growth, investors will likely re-evaluate assets like bitcoin, Novogratz said.

He also dismissed concerns over the Russian government using crypto to evade international sanctions and said that won't happen.

Novogratz is a long-time crypto bull and, despite his reservations about the potential for another rally, believes it could be universally adopted as a means of payment.

"Bitcoin grew so much faster last year, crypto grew, than the internet did in its best years in the 90s. And so I see this going viral everywhere," he said. He also stated that if bitcoin doesn't reach a $500,000 price in five years then he was wrong on the adoption cycle.

Bitcoin surged to record highs last year of around $69,000 late last year, before retreating to around $40,000 right now. Even though it's been declining for months, it's still almost 1,000% higher than where it was this time last year.

The entire crypto market has lost some $500 billion in value since the start of the year, according to CoinMarketCap. It reached a peak of almost $3 trillion when bitcoin hit all-time highs in November.

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