The run-up in cryptos over the past several months has amazed even the most staunch among the anti-crypto crowd as Bitcoin (BTC) stands poised to do something it has never done before – reach a new all-time high (ATH) prior to its halving.
At its current price of $61,900, King Crypto is only 10.3% below its ATH of $69,000, and with the halving anticipated to occur around April 19, that leaves more than enough time for BTC to increase another $8,000 to surpass the important milestone.
But the last mile may be the hardest, according to Galaxy Digital CEO Mike Novogratz, who warned that Bitcoin could dip into the $50,000 range before ultimately rallying to a new ATH.
“I wouldn’t be surprised to see some corrections and some consolidation,” Novogratz said during an interview with Bloomberg TV. “If it corrects, it might correct to the mid-$50,000s before taking off to the new high.”
He said the rally to $64,000 suggests that Bitcoin is in “price discovery,” but warned that things look “frothy” amid the frenzy surrounding the recently launched spot BTC ETFs, which he said have brought in “a new army” of salespeople and buyers into the market.
Novogratz warned that while big institutional players have less leverage in the current cycle as compared to the bull run of 2021, retail traders are “too leveraged,” which is likely to lead to some pain during the inevitable correction.
“I think the market is too leveraged right now. It happens after huge runs,” he said. “There will be a washout. People can’t sustain this much leverage.” For the Millennial and Gen-Z crowd who have been actively participating in this rally and coin hopping as they chase gains, he said, “Some will make money, and a lot will get wiped out.”
He also suggested that Bitcoin has the potential to surpass gold to become the largest store of wealth in history despite the significant difference in market capitalization between the two assets.
His line of thought on this included the wealth held by baby boomers, who are now in the sunsetting phase of their financial lives and could soon pass on that wealth to the younger generations, including Millennials and Gen-Zers.
Novogratz highlighted that Boomers hold an estimated $85 trillion in wealth, a substantial portion of which is managed by registered advisors, who now have access to a regulated BTC investment vehicle for the first time.
This group of investors also have a high level of trust in platforms like BlackRock and Fidelity, he said, and those firms, which offer the two most popular BTC ETFs, have been recommending that clients make even a small percentage allocation to Bitcoin, which could result in trillions of dollars flowing into the crypto market.
As younger investors inherit wealth, Novogratz said they are more inclined to invest in digital assets like Bitcoin rather than more traditional investments like gold.
“For every Charlie Munger – God rest his soul – who passed away, that money is finding its way to Gen Z and Millennials, and they feel much more comfortable with digital gold than old, clunky gold,” he said, adding that this shift in investor sentiment could drive significant adoption of Bitcoin in the coming years.
Novogratz also predicted that Ether ETFs will be approved by the SEC at some point in 2024, but noted that he is biased on the topic as Galaxy, under a partnership with Invesco, is one of the applicants looking to offer a Spot Ether ETF.
The Galaxy Digital CEO is not alone in his concerns that Bitcoin and the crypto market could see a correction before the halving.
While speaking with CNBC’s Fast Money on Thursday, Brian Kelly, the founder and CEO of digital asset investment firm BKCM, warned that Bitcoin could decline to around $43,000, a 30% drop from its current value.
“Considering the short-term outlook, a pullback wouldn’t surprise me,” he said. “I remind my team daily that even in the bullish phase of 2017, with Ethereum soaring by 4,000%, there was still a month it dipped by 50%. Bitcoin’s extreme volatility means a 25 or 30% decrease wouldn’t be shocking.“
“This is an asset that is still extremely volatile,” he added. “If it pulled back 25% or 30%, it wouldn’t surprise me at all, but long run, I still think we go to new highs.”
But it's not all bad news for crypto investors, according to Kelly, as he predicted that if such a pullback occurred for BTC, traders would take profit and rotate into altcoins, which could lead to significant rallies for certain tokens.
“I do think there could be a rotation trade coming, though, because we had a lot of excitement about Solana (SOL), and it ran into a little bit of headway,” he said. “If [Wednesday] was this short-term top at $64,000 for Bitcoin, what typically happens in a bull cycle is all that money that was made in Bitcoin and Ethereum starts to look for another home.”
“So you look at Solana, you might look at something like a Chainlink (LINK), you know one or two down that have a real use case and a real reason to exist. I think they could actually be the beneficiary of a pullback in Bitcoin,” Kelly said.
