Mike Novogratz Warns of Credit Crunch in US and Globally — Expects Fed to Cut Rates ‘Sooner Than We Think’

Galaxy Digital CEO Mike Novogratz has warned of a credit crunch in the US and around the world. Stressing that “we’re heading into a recession,” he expects the Federal Reserve to cut interest rates “earlier than we think.”

Novogratz on the global credit crisis and recession

Galaxy Digital CEO Mike Novogratz shared his outlook for the US economy in an interview with CNBC on Wednesday. Comparing the current state of the market to December 2018, he said: “It reminds me a lot of December 2018 when the Fed had the idea [interest rate] went up, and sure enough, that sent the market into a tailspin, and shortly after that they had to reverse it.”

Noting that “information has changed dramatically” in a short period of time, he explained:

The commodity market is telling you, the oil market is telling you that we are heading into a recession. We will have a credit crunch in the US and around the world.

Novogratz stressed that Federal Reserve Chairman Jerome Powell “should pause and cut rates sooner than we think.” He added: “This is a huge shift in psychology. There is bitcoinBTC) and ethereum (Ethereum) in move.”

The chief executive continued: “If there was ever a time to be in bitcoin and cryptocurrencies – that’s why they were created, because governments print too much money whenever the pain gets too big and we see it.”

Asked if he sees “the possibility of contagion” in the US banking system and around the world, Novogratz confirmed: “There is contagion.” He added that people are learning lessons and will end up relying on only four or five depository institutions.

“I think Congress and the Fed will have to do something more drastic… or we will see constant pressure on these regional banks and the whole system,” Novogratz concluded:

Now we have a market that will go into a credit crunch, how are banks recapturing capital? They lend less. You’ll see the credit crunch going on in the United States and it’s starting to drastically affect the market.

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