Michael Novogratz, crypto investor and CEO of Galaxy Digital, said CNBC that the cryptocurrency market is experiencing the same turmoil that Long Term Capital Management caused in 1998.
Long Term Capital Management was a highly leveraged hedge fund run by Nobel Prize-winning economists and Wall Street traders. When the company went bankrupt, the US Federal Reserve was forced to bail it out to prevent the financial markets from crashing as Wall Street investment banks were exposed to the fund.
“We are going through what seems to me a bit like a moment of long-term money management in cryptocurrencies.
It was a big hedge fund with all the leverage, and when it started spinning, the repercussions were all over the place. We are seeing this in the crypto space right now.”
Novogratz, who invested in LUNA, blamed the collapse of the Terra ecosystem and the ongoing Celsius crisis for accelerating market deleveraging.
“We have come to a level that should be close to the bottom. $21,000 in bitcoin $1,000 in ether. There was a huge amount of surrender and fear.
This is usually not the best area to sell, but that doesn’t mean we can’t go lower. I think the macro environment is still quite complex.”
Novogratz’s comments come as the cryptocurrency market is experiencing one of the worst crashes in history. According to data from Cryptoslate, the total market capitalization of cryptocurrencies fell below $1 trillion and Bitcoin (BTC) fell below $21,000 on June 14th. At the time of writing, Bitcoin is trading at $22,481 while the price of Ether (ETH) is hovering around $1,225.
Credit : cryptoslate.com