A few days ago, the CEO of Galaxy Digital, Mike Novogratz, told CNBC that he believes that $38,000 is the bottom of this phase of decline for the price of Bitcoin.
"I know big institutions who are going through their process to put positions on. They're going to see those as attractive levels to buy," says @novogratz on calling for a #bitcoin bottom at $38,000. pic.twitter.com/wsUM68Fvpx
— Squawk Box (@SquawkCNBC) January 6, 2022
Bitcoin’s price drop
The statement was made when the price was just below $43,000, i.e. before the 7 January drop that brought the price down to around $40,000, and of course also before yesterday’s brief drop that brought it below this psychological threshold.
In reality, during this phase of decline, which began after the price reached a new all-time high on 10 November 2021, it has still never fallen to $38,000, although it came close yesterday.
For example, during the sharp drop on 4 December, it had fallen to around $42,000, a support that held until 7 January.
Yesterday, however, after falling below $40,000, it rebounded back to $42,000.
It is not impossible for Bitcoin’s price to retest the $40,000 support, or go even lower to the $39,000 level tested yesterday, or even to the $38,000 level suggested by Novogratz.
The bottom for Bitcoin according to Novogratz
The CEO of Galaxy Digital also said that he knows of large institutions that are considering finally opening positions on BTC, considering the current levels “interesting” for possible purchases.
The question could be just that: what could be considered a threshold interesting enough to induce whales to buy Bitcoin at this time?
Novogratz suggests that the minimum threshold would be $38,000, but that even below $42,000 some whales might be interested in buying.
In particular, in light of these considerations, he speculates that the bottom at this stage could be in the range of $38,000 to $40,000, which is exactly the point touched briefly yesterday.
This does not at all mean that the subsequent rebound to $42,000 is the end of the period of decline, but that Novogratz believes that the price is unlikely to fall below that range at the moment.
Novogratz’s suggested interpretation of the current movements is linked to inflation in the US, and especially the Fed’s subsequent actions. The inflation figures for December have not yet been released.
In the past, in similar situations, the bottom has been touched several times before the real rebound.