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Billionaire investor Mike Novogratz says the record breaking crypto rally shows a lack of confidence in the Fed – and cites central bank uncertainty as the reason behind Bitcoin’s recent surge | Currency News | Financial and business news

Mike Novogratz, CEO of Galaxy Digital.

  • Billionaire investor Mike Novogratz said Thursday that Bitcoin is serving as a “reporting card” on the performance of the Fed and other global financial institutions.
  • Bitcoin’s surge has been fueled by “mass adoption” and people who are “afraid of monetary and fiscal policies,” he said.
  • Galaxy Digital’s CEO suggested buying Bitcoin and Ethereum.
  • Check out Insider’s business page for more stories.

Billionaire investor Mike Novogratz said Thursday the surge in cryptocurrencies serves as a referendum on the Federal Reserve’s perceived ability to manage risks to the world’s largest economy, suggesting that people keep buying bitcoin.

The U.S. economy is in the midst of rebounding from the COVID-19 pandemic, with growth partly aided by federal fiscal aid of $ 5 trillion the government granted during the health crisis. The stimulus is widely expected to drive consumer price inflation past the central bank’s target of 2%. The Fed has announced that it will tolerate higher inflation for a while to offset growth.

There is a “slim chance” that the Fed can “land the plane” and avoid a massive spike in inflation / debt default, Novogratz said Thursday.

“The crypto markets are telling us there is a growing likelihood that they won’t be able to land the plane,” the billionaire told the New York Alternative Investment Roundtable, a nonprofit that promotes best practices and education in the alternative investment industry.

“Bitcoin is a testament to how central banks and finance ministers are doing,” added the CEO of Galaxy Digital.

According to Novogratz, Bitcoin has increased due to two main factors: “Mass adoption and people are scared – less because of monetary and fiscal policies.”

Bitcoin was trading at around $ 53,000 on Thursday after the Coinbase cryptocurrency exchange on Nasdaq rose to nearly $ 65,000 on the same day last week.

Novogratz’s comments landed on the same day that ether, the second largest cryptocurrency, jumped to a new record high of over $ 2,560 and its market cap surged near $ 300 billion for the first time.

“Simple advice: buy Bitcoin, buy Ethereum, then do your homework on some stocks,” he said. He doesn’t like crypto mining stocks because “it’s just bitcoins deferred,” but he understands the demand when people want to get in.

Novogratz previously hit the Federal Reserve, saying it had fueled a boom in speculative assets like so-called meme stocks including GameStop by lowering interest rates, which made cheap borrowing easier and less attractive to save.

“All of this is happening because interest rates are zero,” Novogratz said in CNBC’s Squawk Box this week.

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