The crypto market rally is built on hopes of Fed rate hike slowdown and looming US credit crunch, Galaxy Digital’s Mike Novogratz says

Mike Novogratz, CEO of Galaxy Digital, said that the recent cryptocurrency market rally was a reference to traders speculation on a slowdown at central banks tightening and a possible US credit crunch.

Interview with CNBC: The long-time Bitcoin bull stated that the rise in token prices is a sign of crypto’s original use as a safe haven from government monetary policy like Federal Reserve interest rate hikes. He also warned about the dangers of keeping funds in traditional banks.

The white paper of Bitcoin, which outlines its purpose, was published around the time of 2008’s Great Financial Crisis. Novogratz explained to CNBC that this was due to a ‘distrust in centralized governments [and] bank[s].”

He said that today’s failures of Silicon Valley Bank and other specialist lenders have “re-galvanized the original story.”

“We are heading into a credit crunch here in the United States… Assets which will do well during a slowdown tell us something,” the ex-partner at Goldman Sachs said about bitcoin, ethereum and gold.

“We are having a fairly constructive rally that is based on a lot of things. “The market is pretty certain that [Fed] Chairman [Jerome] Powell has finished or is close to finishing,” he said, referring to optimism about tightening ending soon.

Bitcoin supporters often claim it is an inflation hedge. However, the price of crypto has been highly sensitive to Fed actions. Views for tighter policy on crypto and other risk assets have had negative effects while those with looser policies boost crypto.

Since the beginning of the year, cryptos have trended upwards. In the last three months, Bitcoin and Ethereum have risen 68% and 37%, respectively. Messari reports that Bitcoin hit a 10-month high Tuesday, surpassing $30,000