How Low Will Bitcoin Go In 2022? Novogratz Says It’s Going To Be A ‘Very Difficult Year’ For Crypto

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Investor Optimism Is At An All-Time High Despite SEC Rejecting Every Bitcoin Spot ETF
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  • Mike Novogratz believes the hawkish Fed has led to the current market downturn.
  • The CEO believes that cryptocurrencies have already taken much of the beat down. 
  • He expects 2022 to be a tough year for the asset class. 

Mike Novogratz disclosed that 2022 would be a tough year for asset markets. He noted that the cryptocurrency market had already taken most of the hit.

A Hawkish Fed

In an interview with CNBC, Mike Novogratz revealed that the Fed had taken a more hawkish position, which has led to price corrections across different markets, including the cryptocurrency market. This was contrary to the Fed’s hesitation to raise rates and reduce supply due to the economic impacts of the pandemic.

The Galaxy Investment Partner CEO said that the previous stance of the Fed had created a sort of “asset bubble,” which saw spikes in the valuation of crypto assets. However, various markets are experiencing a downturn as the market’s risk-off sentiment grows. Novogratz believes that the crypto market has already taken much of the “beat down,” noting that major assets were already down about 50 to 70%.

Novogratz went on to say that he expects 2022 to be a difficult year for asset markets. He noted that the first few weeks of the year had seen a lot of panic selling, making sentiments bearish and not easy to trade. Novogratz also expects the equity market to have a rocky 3 to 4 months.

“I think it is going to be a very difficult year for assets. The stock market could have been a lot worse today. Nasdaq finished roughly flat, S&P down small…There has been a lot of fear in the first 3 weeks of the year, a lot of selling. You know, I think bear markets are difficult to trade, because you got big squeezes and they sell off again. I think we are going to have a lot of indigestion for the next 3 or 4 months in both equity markets, and I think we have had a lot in crypto markets,” he said. 

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Bitcoin In 2022

2022 has not started out for Bitcoin as many pundits would have expected. Just before the end of last year, analyst Alex Krüger identified a bullish pattern for Bitcoin at the start of every year since 2018. He called it the “first week of the year effect.” Krüger believed that the pattern was likely to repeat itself with the expectation of an institutional capital inflow.

“Still expect a strong crypto market in early Jan driven by fund inflows. Then risk-off ahead of the next FOMC (Jan/26) if the next inflation print comes in too hot (Jan/12).”

However, it has not gone as pundits like Krüger predicted, as selling occurred that sent the asset spiraling to lows of $33,000. Many Bitcoin evangelists are still keeping their faith in the asset’s long-term prospects with eyes on a potential approval for a spot Bitcoin ETF in February.