Galaxy CEO says Fed rate cuts could revive Bitcoin and silence critics

Galaxy Digital CEO Mike Novogratz thinks Bitcoin’s recent struggles may not last much longer. Speaking on a podcast with Anthony Scaramucci, Novogratz said a change in U.S. monetary policy could revive the world’s largest cryptocurrency. 

Bitcoin has been depressed in recent months, with weak prices, low retail interest, and increasing pessimism about its price, he said. 

“Bitcoin needs an easing cycle,” Novogratz has repeatedly emphasized in recent commentary. According to Novogratz, the Federal Reserve’s current stance has kept liquidity constrained, limiting Bitcoin’s ability to break through key psychological price levels.

Still he argues that if the U.S. Federal Reserve were to cut interest rates, the market might come back to see a more balanced picture of the cryptocurrency

Is Bitcoin losing its momentum?

Concerns about Bitcoin momentum were also raised by Anthony Scaramucci on the All Things Markets podcast, where he pointed to weakening indicators such as BTC’s Relative Strength Index (RSI), a widely watched measure of market momentum that has recently fallen to unusually low levels.

Google searches for Bitcoin have declined in recent years, and market interest is at an all-time low. And people are increasingly concentrated in Bitcoin ownership. 

Scaramucci said that currently, 79% of Bitcoin’s circulating supply is owned by people who haven’t moved their coins in a long time. 

That’s a question of whether these trends were a sign of a market bottom or of Bitcoin becoming a “dead asset.” Novogratz rejected that view and urged investors to be patient. 

“You’ve got to give Bitcoin the benefit of the doubt,” he said, saying investors should wait until at least next year before deciding on the asset’s long-term future.

How could federal reserve rate cuts help Bitcoin?

The reason for Bitcoin’s recent weakness is that the market expects U.S. interest rates to stay high for a long time, Novogratz said. Investors have been expecting a more aggressive policy stance from the Federal Reserve as it transitions to the new Fed chairmanship. 

The markets have come to expect higher borrowing costs. And Novogratz said this has also weighed on Bitcoin and other assets, such as gold. 

On Bitcoin, he thinks the situation would change if the U.S. economy were weak enough to push the Fed to reverse course and cut interest rates. 

Low rates generally make risk assets attractive, as borrowing is cheaper and liquidity rises in the financial markets. Many investors may not realize that future rate cuts are likely, Novogratz said. 

The issue of debt and economic conditions can eventually push the Fed into a more accommodative policy, he said. 

Bitcoin may attract investors who are still seeking protection against currency debasement and inflation, restoring some of the momentum it has lost in recent months.

What is missing from the Bitcoin market right now?

Despite his long-term optimism, Novogratz admitted that the Bitcoin market currently lacks enthusiasm. He said there is little fresh demand entering the market and described the current environment as one with “no energy” and “no new buyers.” This lack of new capital has contributed to Bitcoin’s inability to sustain upward momentum.

Novogratz also referenced challenges facing some Bitcoin-focused investment strategies. He pointed to concerns surrounding financing models associated with Strategy Executive Chairman Michael Saylor, whose company has become known for aggressively accumulating Bitcoin through debt and capital-raising programs.

Even so, Novogratz remains confident that the broader Bitcoin story is not over. He believes investors should focus less on current market sentiment and more on the factors that could emerge over the next several months.

According to him, the key catalyst remains a potential shift in Federal Reserve policy. If economic conditions deteriorate and interest rate cuts return to the agenda, Bitcoin could regain its appeal among investors.

For now, Novogratz advises patience. Rather than focusing on short-term weakness, he suggests waiting until around March next year to reassess Bitcoin’s outlook.

His message is straightforward: Bitcoin may be facing a difficult period, but the factors that drove its rise in previous market cycles have not disappeared. If the Federal Reserve eventually eases monetary policy, the cryptocurrency could regain favor, and critics may once again be forced to reconsider their views.