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Michael Novogratz said that the upcoming Bitcoin halving event is set to push the BTC price higher especially with the traditional markets are falling due to the COVID-19 spread.
Money does not grow on trees. But, it seems like it has started doing just that as governments around the world initiate massive fiscal stimulus packages. All these occurrences coupled with the forthcoming Bitcoin halving present a strong case for BTC. These developments seem to be exciting crypto proponents. One of these proponents is Michael Novogratz, the founder of Galaxy Digital crypto-focused merchant bank. While speaking to the media on April 21 when additional stimulus measures were announced, Novogratz doubled down on Bitcoin before its halving:
“Bitcoin has this moment right now. Just today we had another trillion-dollar stimulus—money growing on trees, and my mother taught me when I was younger, ‘money doesn’t grow on trees’.”
The Wall Street veteran believes that more people are turning to crypto as fiscal stimulus continues. People are searching for something scarce to safeguard their portfolios. The latest measures by policymakers and reduced rewards for miners after the Bitcoin halving event are likely to boost BTC’s attractiveness, according to Novogratz.
Novogratz thinks that a macro tailwind will arise in conjunction with the adoption tailwind that is happening in the Bitcoin market while the halving is closer and closer. He added:
“Gold already has its story, it’s going to put new highs in this year, and so I think that’s a really powerful story that policymakers are going to continue to play into.”
Economic Fallout to Favor Bitcoin
Many other investors are also convinced that the economic uncertainties arising from the rapid spread of COVID-19 may favor Bitcoin. Chamath Palihapitiya, an ex-Facebook executive, said that the reaction from governments will impact Bitcoin more than the coronavirus pandemic itself.
The current economic crisis seems to enhance Bitcoin’s chance of playing a major economic role from 1% to even 10% according to Palihapitiya. In such an occurrence, he is convinced that BTC price will surge into the millions of dollars.
Bitcoin is yet to shine even after the World Health Organization declared COVID-19 a global pandemic. The flagship crypto still languishes a distant 30% down from the February year-to-date highs.
Dan McArdle, the Messari co-founder, believes that Bitcoin is down due to inconsistencies about the crypto’s key value proposition. According to McArdle, Bitcoin more a hedge against inflation and confidence loss in fiat currencies than it is a typical recession hedge.
The use case of Bitcoin is likely to be seen in the next several years after major central banks around the world added trillions to their balance sheets. McArdle explained:
“If they’re successful in preventing further asset price declines, the new liquidity may very well seek out scarce assets such as Bitcoin.”
Bitcoin Halving: How Will It Impact Global Economy?
The Bitcoin halving may reduce the dollar’s dominance in the global economy according to Simon Peters who is an analyst at eToro. He said:
“It could be that investors are choosing not to sell their holdings as we might expect, and instead are staying in Bitcoin so as not to miss out on the anticipated gains in the months following the halving.”
But, others have different opinions. Jason Deane, a Quantum Economics analyst said that investors should not expect anything to happen any time shortly. He explained:
“It will take time for [the] effects of both QE [quantitative easing] and the reduced supply of Bitcoin to filter through.”
Based on Deane’s account, maybe Bitcoin’s moment to shine is not right now but it could be soon.
Bitcoin and Oil Markets
Currently, it seems there are many factors in the crypto markets that are yet to reflect in the BTC price. The probable inflationary forces of the Federal Reserves stimulus packages and the deflationary effect of the COVID-19-induced global recession are some of them. Heath Tarbert, Commodity Futures Trading Commission Chair, told CNBC on April 21 that markets are still reacting to many things happening currently.
Volatility happens abruptly after reality unfolds gradually. That may explain why Bitcoin is trading between $6,400 and $7,400 for all of April amid the coronavirus health crisis and economic turmoil.
The recent oil price plunge shows how inaccurately markets are reflecting what is already known until reality on demand and supply comes up. Hence, traders might not know the effect on Bitcoin’s price arising from probable mass adoption as an inflation hedge until many major institutional investors start buying.
Hence, the market might not experience the full impact of the forthcoming Bitcoin halving event until it comes and goes.