Leading Crypto Analyst Says the Market Is Near the Bottom

Galaxy's Mike Novogratz says Bitcoin should hold around $20,000.

June has already been a dramatic month for cryptocurrency investors -- and not in a good way. Bitcoin (BTC) slipped to its lowest point in 18 months. The total crypto market cap fell below $1 trillion, down $2 trillion from its high last November.

We've seen some tentative gains today, but there's still a lot of uncertainty and the cryptocurrency market has a long road to travel before we can really talk about recovery. All the same, some industry insiders think the end might be in sight.

Crypto analyst says bottom could be near

Founder and CEO of Galaxy Digital Holdings, Mike Novogratz has previously warned that picking market bottoms is "dangerous." Last month he pointed out on Twitter that the 2018 crypto crash had seen even bigger losses, and said investors should scale in slowly.

Nonetheless, this week he told the Morgan Stanley Financials Conference that he thought Ethereum (ETH) and Bitcoin may not have that much further to fall. "Ethereum should hold around $1,000 and it's $1,200 right now. Bitcoin is around $20,000, $21,000 and it is $23,000," he said.

Both Ethereum and Bitcoin held above their respective $1,000 and $20,000 marks in recent days -- in spite of dramatic price drops across the board. Novogratz also said he thought crypto was closer to the bottom than stocks, which he believes could fall by another 15% to 20%.

For Novogratz, the Federal Reserve holds the key to recovery. The Fed is attempting to curb rampant inflation without triggering a recession and its economic tightening measures have been a big reason for crypto's recent price struggles. People are pulling away from riskier assets like crypto as the economy restricts.

The Galaxy CEO tweeted Bitcoin will lead the next rally when the Fed "flinches" and that good projects will follow suit. For those concerned that the recent crisis could mark the end of crypto, Novogratz pointed out that it isn't easy to build change but said, "This industry will not go away."

Novogratz hopes we'll see a Q4 turnaround

While Novogratz doesn't foresee the major cryptos falling that much further, he also thinks it could be some time before prices start to actively recover. He told CoinDesk's Consensus 2022 conference last week that he hoped the economy would slow enough for the Fed to take its "foot off the brake" by the last quarter of this year.

That gives the Fed a few months to tame rampant inflation. Yesterday it announced a 0.75% rise in interest rates, the biggest since 1994. It warned that we can expect another jumbo rate rise next month, unless consumer prices fall before then. The initial reaction to the news was positive in crypto land, with a slight increase in prices. But until inflation is under control and central banks ease up on their tightening measures, it's hard to see how crypto will manage any kind of significant recovery.

Bottom line

It's understandable that crypto investors are eager to see an end to the pain. Many have seen the value of their portfolios decimated in recent months, especially those who bought for the first time last year. In this light, Novogratz's careful optimism is reassuring. He's not predicting that prices will rally tomorrow, but he's also not a skeptic who's telling us that the crypto sky is falling.

That said, if you're considering buying crypto today to benefit from a future rally, be aware that prices could still fall further. There are various clouds still on the crypto horizon, such as further potential economic woes, increased regulation, or a meltdown in decentralized finance. Cryptocurrencies are high-risk assets, and it is crucial you understand the risks and only invest money you can afford to lose.