According to millionaire Bitcoin bull Mike Novogratz, retail investors had legitimate reasons to overextend in the cryptocurrency market.
In the wake of a Bitcoin (BTC) price drop on Tuesday, the day the largest cryptocurrency became legal money in El Salvador, the cryptocurrency market has returned to its previous extremes of price swings and volatility. However, several crypto veterans, including Galaxy Digital CEO Mike Novogratz, were not surprised by the development.
In an interview with Bloomberg, the billionaire Bitcoin bull stated that retail investors continue to dominate the cryptocurrency market, who are “too excited” about recent involvement from institutions such as Visa and Amazon.
People are beginning to realize that “crypto is not just Bitcoin being purchased as a hedge against bad monetary fiscal policy,” as he put it in the statement. “However, perhaps more importantly, it is Web 3.0. It’s the internet of value transfer,” says the author.
Several recent crypto-friendly announcements from financial and retail giants, such as Visa’s purchase of nonfungible tokens and description of them as a promising medium, Walmart’s pursuit of a crypto product lead, and Amazon’s postings for crypto experts, were cited by Novogratz as examples of why retail investors got too long on leverage.
“There is a realization that this is a technology and no investor wants to miss the next internet. This is the next internet.”
According to Novogratz, investors became overexcited, resulting in the price decrease on September 7 being “a little air being popped out of the balloon.”
As his business, Galaxy Digital, prepares to complete its acquisition of BitGo, the infrastructure provider for El Salvador’s official Bitcoin wallet, Novogratz offered his thoughts on the Chivo wallet’s rocky beginning.
Even though the state-issued Chivo wallet faced server capacity challenges, Novogratz is certain that the technological issues will be remedied in due course. He stated that the real concern is how the system would function in six to twelve weeks, and that undertaking such initiatives on a large scale is difficult.
Following the collapse of the Bitcoin price, some analysts pointed the finger at overleveraged traders, and Novogratz’s statements are in line with their findings.
On September 7, the largest cryptocurrency, bitcoin, had a precipitous drop to $43,000, causing more than $3.54 billion in derivatives markets to liquidate. At the time of publication, BTC was trading around $45,000.