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Novogratz says that the price drop is healthy for the system given that the market had spent several months in bullish mode.
The CEO of Galaxy Digital, Mike Novogratz, has stated the current trends in the cryptocurrency market are not worrisome provided Bitcoin remains above $40,000. In his interview with CNBC, the bullish investor calmed fears resulting from the latest market selloff.
Reason for the Market Selloff
Recall that there was a massive sell-off across the cryptocurrency market. Many cryptocurrencies plunged to their lowest levels in more than a month. The selloff was triggered by widespread concerns about the debt crunch of Chinese property giant Evergrande.
Evergrande’s $300 billion debt crunch, it was feared, would affect other asset classes. This resulted in turmoil in the traditional market with global stocks declining broadly. Dow futures also tumbled down by more than 300 points.
The bearish trend of the market resulted in Bitcoin dropping by about 8% and Ethereum by about 10%. Other coins like Solana and Cardano also dropped significantly. The trend dragged the cryptocurrency market capitalization to $1.9 trillion.
Price Drop Is Healthy for the System, Says Novogratz
Novogratz argues that the price drop is healthy for the system given that the market had spent several months in bullish mode. Novogratz said, “I think the market got itself a little too long – the China news scared people.” The investor also stated his belief that the SEC regulatory clampdown on cryptocurrency was also a contributing factor to the sell-off. He however opined that as long as the value of Bitcoin held at $40,000 and Ethereum did not dip below $2,800, the market is in good shape.
Take a bird’s eye view of the market action, Novogratz stated that there is still a growing interest by investors, retail and institutional, in digital assets. “I see nothing but engagement and activity from our investing clients and our corporate clients. The level of inquiry, the level of business hasn’t been higher,” he revealed.
On Decoupling from Other Markets and Value
On whether crypto should decouple from the wider financial market, Novogratz argued that the other assets in the market provided a better hedge against what may be the volatility of crypto assets. As such, he contended that it will take time for any such decoupling to happen.
He also commented on the Bitcoin value debate which has been a subject of discourse recently. While some assert that Bitcoin has inherent value, others like Ray Dalio of Bridgewater Associates argue that all that Bitcoin has is perceived value.
In his response, Novogratz stated that getting into philosophical debates about what value was not necessary for him. He said,”A Matisse painting can run $100 million because a small amount of people decide they’re worth $100 million. Over 150 million people around the world have decided Bitcoin is worth something. That’s enough for me.”