Former hedge fund manager turned bitcoin and crypto investor Mike Novogratz appears to have predicted the recent bitcoin crash that’s affected the space. He said not too long ago in an interview that there was a “speculative frenzy” surrounding bitcoin that he thought was getting too out of hand.Mike Novogratz Warned Us About BTCOne of the big problems with bitcoin is that whenever it shows signs of spiking, people – largely new investors – want to get in on the action. This would be fine, except that users tend to overbuy the asset. From there, they wait for the currency to rise again, and then once it does, they engage in a sale. They sell either all or part of their stashes, and these sales all tend to happen at around the same time.As a result, bitcoin cannot withstand the selling
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Former hedge fund manager turned bitcoin and crypto investor Mike Novogratz appears to have predicted the recent bitcoin crash that’s affected the space. He said not too long ago in an interview that there was a “speculative frenzy” surrounding bitcoin that he thought was getting too out of hand.
Mike Novogratz Warned Us About BTC
One of the big problems with bitcoin is that whenever it shows signs of spiking, people – largely new investors – want to get in on the action. This would be fine, except that users tend to overbuy the asset. From there, they wait for the currency to rise again, and then once it does, they engage in a sale. They sell either all or part of their stashes, and these sales all tend to happen at around the same time.
As a result, bitcoin cannot withstand the selling pressure that people are putting on it. The currency drops into oblivion, and its price ultimately suffers. Novogratz is warning that this may be the case surrounding BTC as of late. People got so enthused about its recent rise towards the $12,000 range that they bought up several new bitcoin units quickly.
However, the moment it did strike the $12K mark, things took a nasty turn. People began selling their stashes to make a quick profit. From there, bitcoin began to suffer. This is not a great way to invest in that people are selling their coins too early. If they wanted to rake in more money, it would probably be smarter to potentially wait until the currency rose even further. Once bitcoin hits some super high numbers, then a sell wouldn’t be out of the question.
Novogratz explained:
I’m trying to stay as optimistic and bullish as I can on crypto because it’s really early in the cycle but give the warning that there are other things in the markets that have me worried.
In addition to all the selling pressure surrounding BTC, people are also pledging millions to new crypto projects every day, which is ultimately increasing competition. Furthermore, stocks and other markets are being plagued with specific “bubbles” as Novogratz calls them, perhaps the biggest one being Tesla, which has boomed ever since the coronavirus pandemic really took hold on America.
DeFi Is Also Getting Affected
Bitcoin’s sell-off patterns are also beginning to rub off on other coins, such as those involved in the DeFi (decentralized finance) space. Despite the market’s newfound popularity, it appears many decentralized tokens are being sold off along with BTC, which is causing further price drops throughout the digital arena. Tim Plakas of Galaxy Digital Trading states:
High-flying DeFi coins took the biggest hit during yesterday’s sell-off, with many being down 20 percent or more versus bitcoin over the 24-hour period. It was almost a mirror image of what we witnessed in the equity markets yesterday, with many popular tech names getting hit hard as sentiment shifted.