Bitcoin (BTC) and other hard assets will rise sharply in price as the world continues down a path of prolonged and high inflation, argued Mike Novogratz, founder and CEO of major financial services and investment management firms Galaxy Digital.
Novogratz stated at the Bloomberg Crypto Summit on Tuesday that he doesn’t think the world will be done with high levels of inflation anytime soon, warning that we could even see “hyperinflation” ahead.
“We [the US] has a debt to GDP ratio of over 140%. It almost never ends without a debt restructuring or hyperinflation, Novogratz said during the interview at the Bloomberg Crypto Summit in New York City.
Inflation reduces the value of debt in real terms, making it easier for governments to pay it off. It stands in contrast to the conventional way of lowering the debt-to-GDP ratio, which is to increase a country’s economy (GDP) – arguably a more difficult task.
“We had 9% inflation this year, so they did a pretty decent job” of getting rid of some of the debt, Novogratz continued, explaining that with 3% interest rates and 9% inflation, the debt is effectively reduced by 6%.
He added that the only way out of a debt-to-GDP situation of more than 140% is to “inflate the way out.” As a result, “hard assets will win,” he said.
“Bitcoin is not the only hard asset. There are many hard assets that you should have in your portfolio. But Bitcoin is a unique one, and it is gaining adoption,” Novogratz pointed out, arguing that Bitcoin adoption is spreading .
He added that
“There will be a generation of people who really believe in [Bitcoin]and convince their friends, and their communities, and their institutions that this is a good way to store wealth.”
He went on to call the number one crypto a “killer designed to be an anti-inflationary store of value,” saying it’s “easily transferable” and “better than gold in so many ways.”
Adoption in practice is “people telling the story [of Bitcoin]”and other people who believe in it,” the former investment banker continued, noting “that’s how gold became gold.”
“Gold is only valuable because we say it is valuable. It is the same way with bitcoin […] it happens because of the network effect […] I don’t think it’s going backwards, he said.
Asked if he still stands by his previous $500,000 price prediction for bitcoin for the next five years, Novogratz said: “I do, I do.”
“We continue to see institutions in Europe, in the Middle East, in the United States, that haven’t gotten involved yet, and that see this as an opportunity. They don’t dive in with both feet right now, because people who work in institutions are a little more cautious, but once we get balance, once we get equilibrium and start a new narrative, they will come back,” the well-known. said the crypto bull.
At 10:15 UTC, BTC is trading at USD 23,590. It is up 7.7% in a day and 22% in a week.
– Analysts Discuss ‘Inherent Resilience’ in Bitcoin & Crypto as Rally Fades
– The crypto winter ends before 2022 is out – Korbit
– Mike Novogratz now admits that Terra’s model was unsustainable
– Pandemic is the biggest threat to the markets in the next decade – FTX CEO
– The majority expects that Bitcoin will reach USD 10,000 before moving higher – Survey
– Bitcoin could fall to USD 13.6K this year, panel says after adjusting predictions once more