Novogratz: the future of bitcoin after the Coronavirus

After ten days of fear and excitement, the CEO of Galaxy Digital, Michael Novogratz, expresses himself once again on the future of bitcoin and its price.

$btc will continue to be volatile over the next few months but the macro backdrop is WHY it was created. This will be and needs to be BTC’s year.

— Mike Novogratz (@novogratz) March 22, 2020

The volatility of BTC, in his experience, will continue to be important in the coming months. In addition to this observation, Novogratz suggests that Bitcoin was invented in response to events like the one we stumbled upon. 

It is difficult to understand exactly what events he is referring to, surely it can be attributed to the arrival of COVID19 and all that it is involving. 

Some hypotheses can be considered:

• Crash of the traditional financial system;
• Distrust in the monetary policies of the states;
• The necessity of a free, cross-border, global digital currency independent of the central banks;
• Speculation on the fragility of the financial system with a pursuit of the so-called safe haven;
• Transparency on financial transactions related to QE.

The actions put in place by central banks, in accordance with the synergies promised by governments regarding fiscal policies, are an emergency model that produces benefits only in the short term. If they were positive in the long term, they would have been adopted earlier.

The negative repercussions in the long term weigh on the entire society that participates in the economy and uses the instruments inherent in it.

Trust and distrust become the measuring unit of the thermometer with which the narrative of those who invest or hold bitcoin in the long run, measures the fever of the market.

Last week’s big decline and the subsequent cashout in traditional markets followed by the collapse of the capitalization of cryptocurrencies has alarmed Michael Novogratz himself, whose concern was palpable: 

$btc was always a confidence game. All crypto is. And it appears global confidence in just about anything has evaporated. What brings it back to $btc.

— Mike Novogratz (@novogratz) March 13, 2020

It is now clear that the game is played on the field of trust, but something is not right. 

Novogratz himself, during an interview with well-known Bitcoin supporter Anthony Pompliano, explained that he is clearly in favour of the Fed‘s help provided by a massive injection of liquidity into the economy.

While promoting a narrative for which money must be freed from the intermediation of banks and politics, it is essential to implement monetary policies in times of systemic crisis.

These models are apparently irreconcilable, but this is the great novelty brought by the Coronavirus: the need to help economies due to an unexpected stop of operations that is not caused by the problems of the economic system itself had never been evident.

Novogratz, by now, as he himself admitted during the interview, considers himself a long-term hodler. He finds bitcoin’s response unenthusiastic during this phase, but he is confident that the technology will continue to grow. 

He mentions Ethereum at this point, stressing that, beyond the appreciation of the tokens connected to it, its ecosystem is growing and technologically this is a good thing.