Mike Novogratz states most Trump cabinet members are Bitcoin advocates, marking a shift in U.S. crypto regulation.
Institutional Bitcoin buying, led by firms like MicroStrategy, drives a supply squeeze as Bitcoin nears $100,000.
Novogratz warns high leverage in crypto markets amplifies volatility, urging careful risk management amid sharp corrections.
Mike Novogratz, CEO of Galaxy Digital, during an interview with CNBC, said that the world needs to notice that Trump's cabinet is largely pro-Bitcoin. According to Novogratz, almost all members of President-elect Donald Trump’s cabinet are strong advocates for digital assets, including Bitcoin. He emphasized that this pro-Bitcoin stance within the cabinet reflects a marked departure from the previous administration's stringent regulatory approach.
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Cabinet Members Back Bitcoin Innovation
Novogratz noted that several members of Trump’s incoming cabinet actively hold Bitcoin and support the broader digital asset ecosystem. He pointed out that this unprecedented level of support aligns with their advocacy for technological innovation and financial decentralization. Notably, one cabinet member reportedly holds their entire net worth in Bitcoin.
This shift in political sentiment, Novogratz suggested, could significantly impact global markets. He urged global investors to recognize the U.S. administration's openness toward cryptocurrencies. The strong demand for Bitcoin from regions like the Middle East and institutional players further reinforces this growing momentum.
Market Dynamics and Institutional Interest
Novogratz attributed Bitcoin's recent price movements to heightened institutional interest and strategic buying from equity markets. He highlighted the role of companies like MicroStrategy, which use public equity funds to acquire substantial Bitcoin holdings. This buying trend, he explained, has contributed to a supply squeeze, pushing the cryptocurrency closer to the $100,000 mark.
Despite Bitcoin's volatility, Novogratz believes its current price movement reflects the ongoing "price discovery" phase. He explained that while a temporary bounce at key psychological levels like $100,000 is common, the lack of supply could push prices higher. However, he acknowledged a significant seller activity between $92,000 and $94,000, resulting in approximately $15 billion worth of Bitcoin sold recently.
Leverage and Risks in the System
While bullish on Bitcoin’s long-term prospects, Novogratz cautioned about the risks posed by leverage within the crypto market. He highlighted the extensive use of two- to three-times-leveraged trading instruments, both in equities and crypto derivatives. This leverage, he said, amplifies market volatility and increases the likelihood of sharp corrections.
Novogratz expressed confidence that Bitcoin would not retrace below $80,000, considering its pre-election price levels and subsequent momentum. He reiterated that leverage must be managed carefully to mitigate potential market disruptions.
