Mike Novogratz says Bitcoin will reach $40,000 when the Fed begins cutting rates

Bitcoin will reach $40,000 when the U.S. Federal Reserve begins to cut the key rate. Galaxy Digital Mike Novogratz said in comments to Bloomberg.

“The most profitable trades were and will remain longs on gold, the euro, bitcoin and Ethereum — these assets will fare well when the Fed stops raising the [federal funds rate] and starts cutting,” he said.

Novogratz also forecast a contraction in lending amid the US banking crisis. He said this could trigger a credit crunch, and the Fed would have to cut rates more aggressively than expected, in light of a slowing economy.

The main uncertainty for the cryptocurrency market is the U.S. CFTC’s suit against the Bitcoin exchange Binance, filed at the end of March. In April, regulator head Rostin Behnam accused the trading platform of intentional violations of the regulator’s rules.

Earlier, Novogratz said that the rally of digital gold has confirmed the rationale for its creation as a hedge against economic crises in the US economy. In mid-March, he noted that now is the best time to buy Bitcoin as a hedge.

In April, Ark Invest CEO Kathy Wood compared Bitcoin to gold. According to her, Bitcoin and Ethereum are “safe havens” for investors amid macroeconomic uncertainty.

In January, SkyBridge Capital founder Anthony Scaramucci forecasted a “revival” of digital gold in 2023. He believes the Fed will pause its rate-hiking campaign until the inflation rate reaches the 2% target.