Bitcoin and cryptocurrencies remain under severe pressure following the collapse of the major crypto exchange FTX (with the fate of other crypto companies hanging in the balance).
The bitcoin price has plummeted over the last 12 months, dragging down the wider bitcoin and crypto market—though Tesla billionaire sent the price of one bitcoin rival sharply higher.
Now, renowned bitcoin and crypto bull Mike Novogratz has scrapped his $500,000 per bitcoin in five years price prediction, blaming the Federal Reserve's brutal series of interest rate hikes this year (despite expectations climbing the Fed could be about to change course).
"The biggest change that has happened and the real reason bitcoin went down from $69,000 to near $20,000 is that [Fed chair] Jay Powell decided to find his central banking superpowers and start bashing inflation over the head with a series of rate hikes," the Galaxy Digital chief executive told Bloomberg, rowing back his prediction that bitcoin will rocket to $500,000 by 2027 but claiming it will still reach that level eventually.
"The Fed's in control and they're doing a darn good job and that's the main reason why crypto went down," Novogratz said, adding a slew of crypto company scandals has piled pressure on the market.
"The rest of this malarkey that we've had between Three Arrows and BlockFi and Celsius and all these companies that were either poorly run or fraudulently run certainly is hurting the overall confidence in crypto."
This year, the Fed has lifted interest rates to levels not seen since before the 2008 financial crisis in response to runaway inflation that some fear could spiral out of control.
This week, expectations have climbed that the Fed could be poised to shift to a dovish stance after signs inflation could be slowing and Powell signaling the pace of rate hikes could slow.
"Fed chair Powell’s speech addressing the labor market, resulted in improved market sentiment as he iterated the need for caution in the fight against inflation," BitBull Capital chief executive Joe DiPasquale said in emailed comments.
"What the market is now looking toward is a potential 'soft landing,' giving breathing room to both equities and crypto assets. Moving forward, the market will be looking toward the Federal Open Market Committee meeting on December 14 to see if the next rate hike is lower than 50 basis points. If yes, we could see another injection of bullish sentiment, possibly taking the bitcoin price to $20,000.
