As bitcoin breaks through a string of all-time highs, investors should prepare for brief interruptions in its rally, Galaxy CEO Michael Novogratz told CNBC.
“There’s a ton of leverage in the system right now,” the billionaire investor said, adding: “The crypto industry is leveraged to the extreme, so there’s going to be a correction.”
While Novogratz is certain that the world’s largest cryptocurrency will soon break the six-figure threshold, he believes it could then fall to $80,000, which he sees as an absolute floor, a 20% drop from the $100,000 mark.
Leveraged stocks and ETFs tied to cryptocurrencies also look like they’re in trouble, he said, citing MicroStrategy as an example.
“There are definitely going to be some big pullbacks, especially in stocks that have more leverage than the underlying commodity itself,” Novogratz said.
Still, in his view, it is “inevitable” for Bitcoin to reach $100,000. The cryptocurrency peaked at more than $99,000 on Thursday.
Even if a correction occurs, Novogratz believes Bitcoin will eventually regain its footing and move higher because President-elect Trump brings about a “paradigm shift” in cryptocurrency regulation.
“The entire cabinet pretty much owns Bitcoin and is a supporter of digital assets,” Novogratz said of the incoming administration. He added: “So they are all very pro-industry. They’re pro-innovation, they’re pro-digital assets, they’re pro-Bitcoin.”
According to him, the world has taken notice, with a buying frenzy in the Middle East and “inexhaustible demand” in public stock markets.
“I wouldn’t be surprised if cryptocurrencies go higher,” he said. “There’s price discovery going on in the market. There’s not a lot of supply.”
Article forwarded from: Jinshi Data
