Trust Is Returning to the Crypto World

When someone offers an opinion or gives advice in the crypto world one needs to consider the source and their intent. Too many know-nothing celebrities were paid to hype crypto prior to crypto winter. All too often we see predictions of Bitcoin rising to stratospheric heights by folks who offer no rational basis for what they are saying. In this regard it is refreshing to hear from someone who has a crypto business and has a rational basis for his prediction of where Bitcoin will trade in the coming months. What we are seeing is that trust is returning to the crypto world and this, we believe, is a necessary feature if the current crypto boom is not just going to fizzle out and die.

Will Bitcoin Reman in the Fifty-five to Seventy-five Thousand Range?

Bloomberg reports on an interview with Michael Novogratz who is the CEO and founder of Galaxy Digital LP. This is a financial services company, think DeFi. They provide services based on digital assets including blockchain technology, specific cryptocurrencies, and other digital assets. Mr. Novogratz believes that Bitcoin is going to be trading in the $55,000 to $75,000 range going forward. He bases this prediction on what he is seeing in his business. What he is seeing is trust returning in the crypto world. What he is referring to is that clients are willing to make unsecured crypto loans for extended periods of time which was not the case as recently as late in 2023. They are seeing folks who are now willing to take on counterparty risk in this arena as well.

Follow the Money If You Want to Know What Is Going on in Bitcoin

When we are confronted with situations that seem inexplicable, an old adage often applies. Follow the money. No matter what people are saying, they typically act in their own financial interests. In regard to the current state of cryptocurrencies, it would appear that more money is being entrusted to crypto-related investments. If folks with enough crypto to lend out are comfortable with lending it, this implies that they believe that they will not only receive interest on their loans but that the crypto they eventually get back will not have fallen greatly in value.

Interest Rate Disappointment and the Price of Bitcoin

In the short term this year two specific things have driven the price of Bitcoin higher. One was the long-awaited approval of spot Bitcoin ETFs. The other was the widespread expectation that the US Federal Reserve was not only done raising interest rates in order to control inflation but that they were about to start cutting rates. Spot Bitcoin ETFs have fulfilled at least part of their promise of making Bitcoin investing and trading available to folks with no knowledge of or interest in the blockchain, crypto wallets, or the danger of some North Korean hacking all of their Bitcoin assets. Interest rates have been a different matter. Inflation remains “sticky” in the words of economists and the Fed is in no hurry to cut rates and even says that, theoretically, they might even raise rates again. In the short term this is keeping the price of Bitcoin from going up. But, it has not driven the price significantly downward.

Bitcoin Price Versus Bitcoin Value

People buy and sell assets like Bitcoin over the short term based on anticipated price fluctuations. People remain invested in an asset like Bitcoin because of their perception of value. Value is not an anticipated spike in Bitcoin’s price because Bitcoin has proven to have high peaks and low valleys. Rather it is the perception that Bitcoin is indeed in it for the long haul as a store of value and means of doing business. That perception appears to align well with what Galaxy’s Mr. Novogratz is saying about Bitcoin holding its own on price as the market regains some of its trust in Bitcoin.

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