In a recent interview with CNBC, Galaxy Digital Founder and CEO Mike Novogratz reflected on the current market situation, comparing it to December 2018, when the Federal Reserve attempted a final rate hike, causing markets to tumble.
He emphasized that rapidly changing information and commodity markets signal a potential recession and credit crunch in the US and globally.
Novogratz believes that the Fed should pause and will likely cut rates sooner than anticipated, leading to a shift in psychology and boosting assets like Bitcoin and Ethereum. He suggests that this is the perfect time to invest in cryptocurrencies, as they were created in response to excessive government money printing.
Novogratz also noted that while US bailouts have helped stabilize certain assets, there are concerns about a potential domino effect. He argues that the Fed and Congress may need to take more dramatic actions to address depositors’ concerns and prevent constant pressure on regional banks and the financial system as a whole.
As a result, the Galaxy Digital CEO foresees a credit crunch in the US, prompting banks to lend less to rebuild capital. He advises investors to consider long positions in gold, silver, yield curve steepeners, and Bitcoin. He describes these as “bunker trades” designed for the current environment.
Finally, he touched on the Fed’s challenging situation, with shifting policies and potential errors. He mentioned an old adage that the Fed hikes rates until something breaks, and he believes that last Friday, something did break. He anticipates at least a pause in rate hikes, if not a shift to a dovish policy.
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