Mike Novogratz Predicts 'The Economy Is Going To Collapse,' But This Crypto Is Poised To 'Explode' Higher

Zinger Key Points
  • Novogratz maintains a bullish outlook on cryptocurrency despite his dim outlook on the economy. 
  • The Galaxy Digital CEO predicted crypto, specifically Bitcoin, would lead markets higher on the other side of the Fed's tightening cycle.

Several analysts and economists are anticipating a potential recession in 2023, but very few have turned as negative as Galaxy Digital Holdings Ltd BRPHF CEO Mike Novogratz seemed to be during an interview with MarketWatch on Wednesday.

What Happened: Novogratz warned investors that the economy is headed for a sharp downturn and suggested that a recession is impending.

"The economy is going to collapse," Novogratz reportedly told MarketWatch ahead of the Federal Reserve's rate hike decision. "We are going to go into a really fast recession, and you can see that in lots of ways."

See Also: What Recession? Why Kevin O'Leary Says 'You're All Wrong' About The Economy

Novogratz highlighted several factors pointing to a potential recession. 

"Housing is starting to roll over," he told MarketWatch. "Inventories have exploded."

Layoffs are starting to roll in and the Fed is in a tough spot and will be forced to hike rates until inflation cools, he explained. 

The Fed raised interest rates by three-quarters of a percentage point on Wednesday in what was its most aggressive rate hike since 1994. The rate increase brings the target range for the federal funds rate to 1.5% to 1.75%. The committee said it anticipates that ongoing increases in the target range will be appropriate.

Ahead of the central bank's announcement, Novogratz reportedly speculated the Fed would raise rates by .75% and predicted the market would rally on the news. He also reportedly said he expected a selloff in stocks to follow the initial move higher. Turns out, he was right on that front. 

Why It Matters: Novogratz maintains a bullish outlook on cryptocurrency despite his dim outlook on the economy. 

In a CNBC interview on Tuesday, the Galaxy Digital CEO predicted that crypto, specifically Bitcoin BTC/USD, would lead markets higher on the other side of the Fed's tightening cycle.

"The moment the Fed flinches, the moment, you know, Powell pauses because the economy is really starting to roll over, you're going to see Bitcoin explode north," Novogratz said.

He expects Bitcoin to bottom around $20,000 and Ethereum ETH/USD to find its lows at around $1,000. 

BTC, ETH Price Action: At time of publication, Bitcoin was up 1.65% at $21,037.13 and Ethereum was up 1.22% at $1,107.37, according to data from Benzinga Pro.

Photo: Wikimedia Commons

Posted In: InflationMarketwatchMike NovogratzrecesssionCryptocurrencyLong IdeasNewsPenny StocksSmall CapTop StoriesFederal ReserveMarketsMediaTrading Ideas

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