A rampant bear market might result in the staunchest supporters beginning to doubt it. Michael Novogratz, who was planning to launch a $500 mln hedge fund in cryptocurrencies, has delayed his plans and says Bitcoin could drop as low as $8,000 before rebounding.
Michael Novogratz has been a long-term Bitcoin bull. He has revised his price projections upwards three times in as many months, given Bitcoin's rapid price increase. In October 2017, he said that he wouldn't be surprised if Bitcoin crossed $10,000 by April 2018. With Bitcoin's rapid appreciation, he revised his target in November 2017, predicting that it will reach $10,000 by the end of the year. Towards the end of November 2017, he even made a courageous prediction that Bitcoin would reach $40,000 in 2018.
Pause button on hedge fund
Novogratz had earlier said that Bitcoin might be a bubble, but there was money to be made from it. He had planned to raise $500 mln for a hedge fund which would invest in cryptocurrencies. The fund would have been the largest to focus on cryptocurrencies and was expected to launch in mid-December. However, he has announced that the hedge fund plan was paused for now.
Speaking to Bloomberg, Mike Novogratz said
We didn’t like market conditions and we wanted to re-evaluate what we’re doing. I look pretty smart pressing the pause button right now.
One of the factors which influenced Novogratz would be the conflicts of interest involved, if for instance he bought Bitcoin for the fund and sold Bitcoin in his personal account.
There are just so many conflicts in that business. It was going to be more complicated than I wanted.
Price to $8,000?
Mike Novogratz was one of the early investors in Bitcoin and Ethereum, buying Bitcoins when the price was $50 and buying Ether during its initial crowdsale for about 30 cents. He has been selling Bitcoin and Ether periodically and is estimated to have made $250 million by liquidating a portion of his holdings in 2017.
Despite his earlier bullishness, he now believes that Bitcoin could plunge to $8,000 and take awhile to recover. He predicts that the price will stabilize between $10,000 and $16,000. The crypto rally in 2017 has enthused many neophyte digital currency investors. However, when veterans like Novogratz begin to call for caution, it might be wise to listen. Investors should always remember the cardinal rule: never invest more than you can afford to lose.