The price of Bitcoin and many cryptocurrencies may have taken a double-digit percentage drop in the last 24 hours, but some crypto experts still seem to be cautiously optimistic about the market as a whole.
In an interview on CNBC’s Squawk Box on Wednesday, Galaxy Digital founder Mike Novogratz said that it was “going to take a while” for crypto markets to consolidate and find a bottom as the price of Bitcoin (BTC) dipped to $30,000 earlier in the day. Novogratz’s comments came when the price of the crypto asset was roughly $38,000, having been more than $42,000 at the close of stock markets yesterday.
"You had a confluence of events: a combination of tax day, Elon Musk tweets, whatnot and we started breaking down the positivity in the price action, and now we’ve got a liquidation event,” said Novogratz. “It's not going to bounce right back, it’ll consolidate for a while.”
"It felt like we had capitulation this morning," says @Novogratz on #bitcoin. "You had a confluence of events a combination of tax day, @elonmusk tweets, what not and we started breaking down the positivity in the price action...it's not going to bounce right back." pic.twitter.com/n0QqjOmh21— Squawk Box (@SquawkCNBC) May 19, 2021
Though the Galaxy Digital CEO estimated that Bitcoin could hit a bottom at $36,000 or $38,000, the price rebounded slightly to reach $42,434 before sliding back under $40,000. At the time of publication, the price is in the $38,000 range.
There are likely many factors at play concerning the recent crypto market volatility. Cryptocurrency prime broker Genesis Global Trading reported there was a Bitcoin-driven sell-off overnight due to forced liquidations and levered closeouts. Meanwhile, the firm said many Ether (ETH) cash buyers came in when the price of the token dropped under $2,000 for the first time since early April, and macro funds were buying BTC when the price hit $35,000.
“While the initial volumes at the beginning of this morning’s rally off the lows were muted, we're seeing the market stabilize with more consistent institutional appetite,” said Genesis.
Others in the crypto space — including Konstantin Boyko-Romanovsky, CEO and founder of validator node hosting platform Allnodes, and Steve Ehrlich, CEO and co-founder Voyager Digital — said the recent price drops may be attributed to people migrating their investments following reports that China had allegedly banned crypto exchanges, services and transactions. Three associations in the country recently outlined issues related to crypto investments and warned people of the market risks.
“Correction in the cryptocurrency market is a common phenomenon,” said Boyko-Romanovsky. “It doesn’t mean, however, that a bear market is underway. The latter would be the case if the blockchain industry were showing signs of slowing down. That can’t be further from the truth.”
“We are seeing a correction, but this is an opportunity for retail participants to reestablish themselves and increase their positions in the market. Crypto is not going anywhere.”