Bitcoin’s meteoric rise this week has hit a wall in the past 36 hours as it dropped from a circa $14,000 high to as low as $10,693. But according to Mike Novogratz of Galaxy Digital, the cryptocurrency would not fall anywhere below the $10,000 level.
The founder told CNBC on Thursday that bitcoin could enter a consolidation phase, wherein it would fluctuate between the $10,000 and $14,000 levels for a while. He stated that it was impossible for investors to turn their eyes away from cryptocurrencies now when Facebook, the largest social media platform, has announced its own.
“One of the largest companies in the world said we believe in cryptocurrencies. […] If you’re an institutional investor who’s getting close and still worried about investing, it makes you that much more confident.”said Novogratz.
High Leverage behind Bitcoin Boom
Bitcoin on Thursday dropped by almost 25 percent from its recently established year-to-date high. CoinStats, one of the best cryptocurrency portfolio management apps, further reported a decrease in bitcoin’s overall dominance rate, that pushed certain altcoins higher on the day.
Genesis Global Trading CEO Michael Moro said that the cryptocurrency’s 50 percent move last week was too much even for the most hardcore bulls. He believed that bitcoin rose merely because of leveraging and that there was nothing else that propelled the price to its yearly high.
“The presence of leverage exacerbates the moves in both directions and affects the speed dramatically. Of course bitcoin has a history of doing this (both upward and downward), but it’s hard to call the magnitude of the move healthy,”said Moro.
Brian Kelly, the CEO of BKCM, seconded Moro, stating that rising leverages led to increasing borrowing costs, which made it difficult for traders to make a bullish bet on bitcoin.