Mike Novogratz, CEO of Galaxy Digital, believes Bitcoin’s recent struggles may not last very long. Speaking on a podcast with Anthony Scaramucci, Novogratz said a change in US monetary policy could revive the world’s largest cryptocurrency.
Bitcoin has been depressed in recent months, with weak prices, low retail interest and growing pessimism about its price. he said.
“Bitcoin needs an easing cycle,” Novogratz repeatedly emphasized in recent comments. According to Novogratz, the Federal Reserve’s current stance has constrained liquidity, limiting Bitcoin’s ability to break through key psychological price levels.
However, he says that if the US Federal Reserve were to cut interest rates, the market could return to a more balanced picture of cryptocurrency.
Is Bitcoin Losing Momentum?
Concerns about Bitcoin’s momentum were also raised by Anthony Scaramucci on the All Things Markets podcast, where he highlighted the weakening of indicators such as BTC’s relative strength index (RSI), a widely watched measure of market momentum that has recently fallen to unusually low levels.
Google searches for Bitcoin have declined in recent years and market interest is at an all-time low. And people are becoming more and more concentrated in owning Bitcoin.
Scaramucci said that currently, 79% of Bitcoin’s circulating supply is owned by people who haven’t moved their coins in a long time.
The question is whether these trends were a sign of a market bottom or whether Bitcoin was becoming a “dead asset”. Novogratz rejected this view and urged investors to be patient.
“You have to give Bitcoin the benefit of the doubt” he saidsaying investors should wait until at least next year before deciding on the asset’s long-term future.
How Could Federal Reserve Rate Cuts Help Bitcoin?
Bitcoin’s recent weakness is because the market expects U.S. interest rates to remain high for a long time, Novogratz said. Investors had been expecting more aggressive policy from the Federal Reserve as it assumes the new Fed chairmanship.
Markets now expect higher borrowing costs. And Novogratz said this has also weighed on Bitcoin and other assets, such as gold.
Regarding Bitcoin, he believes the situation would change if the US economy was weak enough to push the Fed to reverse course and cut interest rates.
Low rates generally make risky assets attractive because borrowing is cheaper and liquidity increases in financial markets. Many investors may not realize that future rate cuts are likely, Novogratz said.
The issue of debt and economic conditions could eventually push the Fed to adopt a more accommodative policy, he said.
Bitcoin could attract investors who are still looking for protection against currency depreciation and inflation, restoring some of the momentum it has lost in recent months.
What is currently missing in the Bitcoin market?
Despite his long-term optimism, Novogratz admitted that the Bitcoin market currently lacks enthusiasm. He said there was little new demand in the market and described the current environment as “no energy” and “no new buyers”. This lack of new capital has contributed to Bitcoin’s inability to maintain its bullish momentum.
Novogratz also referenced the challenges facing some Bitcoin-focused investment strategies. He highlighted concerns about financing models associated with Strategic Executive Chairman Michael Saylor, whose company is known for aggressively accumulating Bitcoin through debt and capital raising programs.
Nonetheless, Novogratz remains convinced that the broader Bitcoin story is not over. He believes investors should focus less on current market sentiment and more on factors that could emerge over the coming months.
The main catalyst, he said, remains a potential change in Federal Reserve policy. If economic conditions deteriorate and interest rate cuts return to the agenda, Bitcoin could regain its appeal among investors.
For now, Novogratz advises being patient. Rather than focusing on short-term weakness, he suggests waiting until March next year to reassess Bitcoin’s outlook.
His message is simple: Bitcoin may be facing tough times, but the factors that led to its rise in previous market cycles have not gone away. If the Federal Reserve eventually eases monetary policy, cryptocurrency could regain favor and critics may once again be forced to reconsider their views.
