Bitcoin is about to fall below $30,000, Galaxy Digital CEO warns that "it will be difficult to bottom out in two months"

As the world flees high-risk investments, the cryptocurrency market continued to fall on Monday, following the U.S. stock market. According to Bitpush terminal data, Bitcoin once fell to an intraday low of $30,788, a 52-week low, a 24-hour drop of nearly 11%, and a drop of more than 50% compared with the historical high of $67,802 in November last year.

Billionaire crypto investor and Galaxy Digital CEO Michael Novogratz warned that the market will get worse before it gets better and it will be difficult to bottom out in the next two months.

According to data provided by Coinglass, more than $700 million worth of cryptocurrencies were liquidated in the past 24 hours.

As more professional investors trade cryptocurrencies, the crypto market has increasingly moved in sync with traditional markets and is highly correlated with the Nasdaq 100. The tech-heavy index is down 23% since the start of the year. In comparison, Bitcoin has fallen 31% over the same period.

“Crypto trading is probably correlated with the Nasdaq until we get to a new equilibrium, and my gut feeling is there’s more losses to come, at least over the next few quarters, in a very volatile and difficult market to trade in, before people feel in equilibrium,” Michael Novogratz said during Galaxy’s first-quarter earnings call on Monday.

Fed rate hikes

Bitpush previously reported that the Federal Reserve raised interest rates by half a percentage point last week, and Wall Street responded with a stock market crash. Risk assets such as Bitcoin were hit hard, and the total market value of cryptocurrencies shrank by more than 10% (more than US$200 billion).

The U.S. Dollar Index (DXY) has been the biggest winner so far this year, having surged more than 8% since the start of the year and reaching multi-decade highs.

Edward Moya, senior market analyst at Oanda, pointed out in an interview with CNBC that investor confidence is low and the market will be dominated by consolidation for most of this year: "Bitcoin is really caught in a sideways news cycle, and you're just waiting for Wall Street to calm down, and then you'll see more people have confidence in investing. I still think there's a lot of long-term potential value here, but you have to be able to withstand this volatility."

Institutional interest cools

2021 was extremely optimistic about institutional crypto investments, with major companies such as Tesla, MicroStrategy, and several payment platforms entering the crypto space, driving bullish momentum, but this did not continue into 2022. According to CoinShares ' weekly funding report, institutional crypto funds have seen outflows for four consecutive weeks.

Moya added that corporate and institutional investors are in “wait-and-see mode,” saying: “There is a view that mainstream adoption is taking a lot longer than people expect.”

Seeking a more secure foundation

Investors are seeking safe havens amid uncertainty, with more confidence in traditional assets as countries such as the United States fully recover from the Covid-19 pandemic and global restrictions end.

Chris Kline, co-founder of Bitcoin IRA, told Yahoo Finance that some crypto investors are weighing other options and “moving their funds back into U.S. dollars and seeing what can be done.”

Bull-Bear Cycle

Crypto markets are cyclical, and what goes up must come down. Since Bitcoin came into being more than a decade ago, there have been four different bull/bear markets. If previous cycles are any guide, crypto markets will likely continue to be bearish for the rest of this year and into 2023 before turning around again.

Edul Patel, CEO of crypto investment platform Mudrex, said the rate hike gave individual and institutional investors pause for thought about the outlook for the crypto market. He said: "The downward trend may continue in the coming days and Bitcoin may test the $30,000 level."

SkyBridge Capital founder Anthony Scaramucci tweeted that if previous cycles are a guide, the price of Bitcoin could rebound after bottoming out at $18,000.

But he is optimistic about Bitcoin's longer-term trajectory, Scaramucci wrote: "For anyone who has studied Bitcoin and the nature of its growth and adoption, the sell-off is not surprising. A crash equivalent to the last cycle would take Bitcoin to $18,000... The fact is no one knows what will happen to prices in the near term. However, if you believe in fundamentals and the long-term transformation of the economy, then Bitcoin will become a $15 trillion asset and a vital part of the future."