Mike Novogratz says Bitcoin won't approach $20k again for 3-4 months, I think he's wrong
Listening to a phone interview by Mike Novogratz, he came out and said that the pullback we had on Friday (yesterday) caused too much damage for prices to make new highs any time soon.
So much damage in fact, that he decided to postpone his Galaxy Digital Assets Fund launch, which was scheduled to launch by the end of this week.
If you are not familiar, Mike Novogratz is a former Macro Fund manager on Wall Street that has been one of the bigger bitcoin bulls over the past year.
He was quoted as saying;
"cryptocurrencies will be the biggest bubble of our lifetime."
To capitalize on those thoughts, he went about setting up a $500 million dollar hedge fund, the largest such hedge fund in the industry. Not only that, but the fund would be backed with a good portion of his own money.
That fund, Galaxy Digital Assets Fund, was the one that got put on ice after the latest bout of volatility in bitcoin.
In his defense, this was more than your normal run of the mill bitcoin volatility.
Prices dropped close to 50% in less than 4 days. With roughly 35% declines coming in a 12 hour stretch yesterday.
Bitcoin markets haven't seen price action like that since 2013.
To put it bluntly, it was downright scary.
Novogratz's thoughts on that price action...
"When you get kicked this hard, it takes a lot of ice to get the swelling down."
For that reason...
"It will take the market a while to recover and bitcoin prices will probably consolidate between $10,000 and $16,000, and won’t approach $20,000 again for at least three to four months."
That is quite a long time before he thinks bitcoin will see new highs again, which is why he doesn't want to launch his fund right now, when he thinks there is a good chance bitcoin might have to go lower for a bit before it can go higher.
Why I think he's wrong:
For one, if you read my piece yesterday, you will know that I think most of that drop yesterday was manipulation. It wasn't "normal" market activity, though I will be the first to admit, there isn't really such a think as "normal market activity".
Either way, I think the drop was done intentionally by a small few as opposed to market forces taking over.
More about that can be read here:
Also, there has been strong correlation between the price of bitcoin and it's network. How strong of a correlation you might ask?
Well according to research published by Tom Lee, there is a 94% correlation between the price of bitcoin and the number of wallets and number of transactions being done per wallet. IE, as the network has increased, so has the price, almost in direct correlation.
Which means that anyone calling the price of bitcoin pure speculation, hasn't been doing their homework.
The price is simply increasing as it's network grows, which doesn't seem that crazy at all.
A model of what Tom Lee is talking about looks like this:
Since November, wallets and transactions have been increasing, but the price had been increasing at a faster rate, which would imply that a pullback in price was needed or a huge surge in network activity was needed.
We got the price pullback.
Currently new wallets and activity is continuing to increase but the price is now going sideways/slightly lower, which is likely coiling the price like a spring for the next move higher.
Finally, the 3rd reason I think that we will hit $20k again a lot sooner than Novogratz thinks is simply because of The Thanksgiving Effect!
Over Thanksgiving, everyone went home to their friends and families and talked about how much money they were making in bitcoin.
Then all those friends and family members went out and opened accounts on Coinbase and bought bitcoin. That is basically when this whole massive upswing in the crypto markets started.
I expect we will see the same thing again over the Christmas/New Year's holidays.
People will be telling all their friends and family about how well they have done this last year in cryptocurrencies and people will be eager to join in.
For that reason I would expect to see a huge surge in buying basically starting after Christmas to a few weeks after New Years.
Overall, I understand why Novogratz is a bit cautious at the moment, but buying at $10k was likely a great entry point if he would have continued along with launching his fund. If he decides to wait a couple months, he may end up paying double that by the time his fund is ready to roll.
Plus, if you check out prices right now, it looks like bitcoin has already peaked above his $16,000 upper limit of his consolidation range.
We will know more in a few weeks.
Stay informed my friends.
Sources:
Image Sources:
http://blog.startwithwhy.com/refocus/2015/11/wrong-vs-missing.html
https://news.bitcoin.com/how-to-explain-bitcoin-to-your-family-this-thanksgiving/
Follow me: @jrcornel
High transaction costs and a transaction backlog may just magnify the design flaws in BTC. Time for another fork???
Hey ,
Thanks for the great content
The truth is that nobody knows which way the price is heading. There are so many big players on both the up and down sides.
And right now, it seems fair to talk about the greater crypto market, as all the top coins seem to be swinging in the same direction (up or down), day after day. If there's a bull run on crypto in general, sure BTC might hit 20k again, but it wouldn't be shocking to see a month of crypto consolidation after a run that still feels like a dream. Might even be a little healthy.
Absolutely. Who knows how "big" the crypto market is going to get. This might just be the beginning of the growth. I think Bitcoin is going to stay below the 50% dominance of the market from now on. There are just too many other alt-coins that have great features.
I know that I am giving away a bunch of crypto this Christmas and spreading the word about Bitcoin :-D
I dressed up as "Bitcoin Man" for Halloween so my friends have been hearing about this for MONTHS. Now they are finally jumping on the wagon too.
Wow. $50 bucks a pop to give away $25 bucks worth of BTC.
Nice! I thought about giving crypto as gifts this year. How do you intend to do that? Will you create a wallet for them?
I'm going to send coin to people that already have wallets and help the ones who don't set one up. If they don't want to use Coinbase or a private wallet I could just set them up with a MyEtherWallet in a matter of seconds and they can send or receive any number of ERC-20 tokens and Ether.
I plan on doing this for my mom. She always wants money for Christmas so I'm going to give her an investment rather than liquidity. She'll probably be mad on Christmas but next year or the year she'll be thanking me LOL. Plus this way I can keep filling her wallets for every holiday. The gift that truly keeps on giving.
https://steemit.com/@muhammadqaiser
More worrying to me: Bitcoin is BROKEN!
It can't handle the transactions of the people buying and selling. By wide margin.
A look at https://blockchain.info/unconfirmed-transactions
shows that who invests in Bitcoin is investing in a BROKEN payment system. Litecoi, Ether & Co. Don't have the problem yet. Because they don't have the load to handle.
Blockchain is 1.0
I know you won't remember Rockwell's words.
Good luck! People are very stubborn!
Come Jan end, 20K+
I think he right.
With current scaling issue, Bitcoin not very usable...
Indeed, today may be the best time to buy to capitalize on the Christmas sharing of bitcoin/crypto success, which should drive friends and family members to invest their own money into the markets.
I divested from bitcoin around $8,000, and my altcoin holdings are doing just fine.
I appreciate the network effect model. These coins seem to due the opposite of past trends (example - Bitcoin Cash and B2X reactions). I hate to say it but Mike could be right.
I think that you're spot on when you say there is going to be a Christmas effect.
Those of us who are involved in crypto tend to lose sight of the fact that to the vast majority of the world it doesn't exist at all, or is only some vague thing that they've barely heard of.
Bitcoin itself is finally gathering enough steam that mass media has mentioned it enough times that people at least recognise the name. Do most of them really understand what it is? I doubt it.
Add to that the fact that way less than one percent of the population has ever even heard the names Cardano, Iota, Monero, Qtum, etc.... much less understands that these are the technologies that will be directly impacting their lives in the very near future...
It's a recipe for truly explosive growth. This is 1994 of the dot com boom.
Another corporate psychopath. He made $250000000 already. THats enough for ten lifetimes. Why doesnt he do something good for the world rather than setting up a shitty hedge fund and trying to manipulate crypto prices