Bitcoin Won’t Pump Again Until Fed Cuts Rates, Says Mike Novogratz

Galaxy Digital CEO Mike Novogratz believes Bitcoin’s price action will go through a long slumber until the market’s “narrative” can rear its head.

This narrative can take one of two forms: either the central bank cuts interest rates or regulators clear the air on crypto.

Bitcoin needs a new narrative

During the company’s earnings call on Tuesday, Novogratz said he believes the cryptocurrency is in a “consolidation phase” after a strong first quarter, and expects the price of Bitcoin to hover between $55,000 and $75,000 until that “the next set of market events will push us higher.”

“Bitcoin always needs a narrative,” Novogratz explained during an interview with Bloomberg on Tuesday. “If you think of Bitcoin as digital gold, there are always two narratives: one is the macro, and two is the adoption.”

Historically, the price of Bitcoin has been influenced by global macroeconomic trends, rising during periods of dovish central bank policy and falling during periods of hawkishness.

Earlier this month, Bitcoin fell below $57,000 on fears that the Federal Reserve would signal a longer period of high interest rates at its upcoming FOMC meeting. While this turned out to be true, the currency rallied after the meeting as the central bank simultaneously promised to slow its pace of quantitative tightening, which is a big help for market liquidity.

The Fed and the regulators

Until macroeconomic data changes and inflation starts to fall, Novogratz believes the Fed is “on hold,” and so is Bitcoin.

“Until you see that near-term rate movement both here and abroad, and/or more regulatory clarity, Bitcoin is likely trading in a range,” he predicted.

Bitcoin’s 50% rise in the first quarter was largely driven by enthusiasm for recently launched spot Bitcoin ETFs. However, funds have seen net outflows in the second quarter.

Both the Bitcoin halving and the launch of the Runes token standard also took place last month, leaving two more narratives behind the leading crypto asset.

As for regulatory clarity, Novogratz doesn’t think it will come for crypto until after the U.S. federal election this fall.

As things stand, crypto has become a partisan issue in the United States, with the Biden administration favoring tighter bars on the industry. At the same time, Republicans are seeking a more welcoming approach to fostering financial innovation.

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