Published
2 months ago on
March 01, 2024
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Galaxy Digital CEO Mike Novogratz has said that he expects Bitcoin to see a correction before potentially hitting a new all-time high.
Novogratz believes that the cryptocurrency could fall to the mid-$ $ 50,000 level before surging higher later this year.
BTC May See Correction Before Rally
Bitcoin’s recent surge seems to have cooled a little as traders warned the breakneck pace of the rally was unsustainable. Among those expecting a price correction is the CEO of Galaxy Digital, Mike Novogratz. Novogratz believes the Bitcoin price will see some correction and consolidation before another rally that could see the cryptocurrency reach record highs. Novogratz stated he expects the cryptocurrency to fall to the mid-50,000s before rallying.
“I wouldn’t be surprised to see some correction and some consolidation, but I’m very loath to pick a Bitcoin high because I really do believe this is price discovery. A correction would see it fall to the mid-$50,000s before surging to a new high.”
Bitcoin’s Recent Surge
Bitcoin jumped 20% over the past week, crossing the $60,000 mark, primarily driven by spot Bitcoin ETFs that continue to see consistent inflows. The recently approved ETFs have pushed Bitcoin into a price discovery phase, according to Novogratz.
“So you’re seeing, you know, a step function in new owners of bitcoin, which is driving, I would say, a frenzy and the whole crypto ecosystem. But with that, the market has become too frothy.”
The cryptocurrency rose by over 5% on Thursday alone to hit $63,649. This follows a volatile trading session a day prior when Bitcoin surged to $63,968 before crashing back below $59,000. Bitcoin’s recent surge and price movements have drawn comparisons to the trading environment that persisted when Bitcoin hit its all-time high of nearly $69,000 back in November 2021, and if this latest rally could herald the beginning of a bull market for the crypto space.
A Potential Liquidity Crisis?
There have also been concerns regarding a lack of Bitcoin supply that is available for purchase in the open market. Over half of the Bitcoin currently in circulation has not moved in over two years, according to data from Glassnode. Stephane Ouellette, the chief executive of FRNT Financial, believes such fears are exaggerated as short-term holders are already beginning to offload positions.
“We have a long way to go between now and when we get to a full bull market, but it does seem like this concern that the market will break due to a liquidity crisis is not necessarily the case.”
According to data from CryptoQuant, the unrealized profit margin of short-term crypto holders is at extreme levels. Another indication that there could be a slowdown is that Bitcoin’s surge has made it extremely expensive to open new long positions in Bitcoin’s perpetual futures markets. According to CryptoQuant, the funding rate for Bitcoin perpetual has been at its highest since April 2021.
“Historically, when the cost of opening new long positions becomes too high, Bitcoin prices tend to pause or experience a correction.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice
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