The crypto market downturn is expected to last about 18 more months, with the first signs of a recovery for the industry appearing after the Fed eases monetary policy, according to Galaxy Digital chief Mike Novogratz in an interview with New York Magazine.
Responding to questions from journalist Jen Viczner about the depth and duration of the current downturn, he said:
“I wish I had a crystal ball. My intuition tells me that 18 months, perhaps a little less. I think by autumn the Fed will have to stop raising rates, and I believe that will calm people down and start rebuilding.”
Novogratz said the market is bracing for a major downturn, as the crisis has changed people’s attitudes toward high-risk assets such as cryptocurrencies. He noted that the past few months have shown the industry’s dependence on leverage, something no one knew.
“I hope we have already seen the worst. I would be more confident if I knew what inflation would be in the next two quarters,” added the head of Galaxy Digital.
Novogratz noted that it will take time for bankruptcies of weak players and the liquidation of collapsed assets. He drew an analogy with the 2008 global financial crisis, after which a wave of consolidation swept through the investment and banking sectors.
The billionaire said there is no need for the community to worry about the collapse of the Tether USDT stablecoin. In his words, the issuer appears to him “quite resilient”.
They have plenty of money on their balance sheet. I think CEO Brian Armstrong will cut that metric significantly in the next one to two quarters. They have a strong brand. The worst-case scenario for them would be the appearance of a major traditional-finance player who becomes their partner or buys the company.
According to Novogratz, Galaxy Digital has not invested in any “lending shops” like Celsius Network. At the same time, the crypto bank invested in the lending platform BlockFi, but exited its stake more than a year ago.
He also stated that his company had never held positions in algorithmic stablecoins and did not participate in liquid staking Ethereum 2.0.
“I think ETH staking will become a big business. Therefore, I expect that we will participate in this,” added Novogratz.
As reported in June 2022, Galaxy Digital’s head said that Bitcoin will lead a new rally in the cryptocurrency market when the Fed stops raising its key rate.
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