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China’s crackdown on crypto has drastically altered the global digital currency landscape with Bitcoin (BTC) struggling to climb back to $40,000. In a recent interview, Galaxy Digital CEO Mike Novogratz offered his analysis on the recent developments in the industry.
Novogratz noted that Bitcoin (BTC) is consolidating between $30,000 and $35,000. With China’s crypto crackdown, he believes that the Asian digital currency market is showing bearish sentiment but that demand from U.S. investors is resisting the selling pressure.
“We’re consolidating in here between [$30,000 and $35,000],” Novogratz said on CNBC’s “Squawk Box.” “What we’re seeing is Asia sells it off, and then the U.S. buys it back. China has declared war on crypto as part of this broader cold war that we’re getting into, and so I think we’re still digesting that.”
Last week, China’s central bank deepened its crackdown by reportedly shutting down a Beijing-based software company. The Beijing Qudao Cultural Development Co Ltd was suspected of being involved in crypto trading activities.
“We have canceled a Beijing company that provides software services for virtual currency transactions and closed its website, no institution may provide services for virtual currency transactions,” the People’s Bank of China said in a statement, according to Coinmarketcap. The company has a token called Mao Li Coin and is focused on the entertainment industry.
Crypto investors have long argued that Bitcoin is inflationary hedge. However, its recent decline might have prompted some managers to rebalance their portfolios.
“There’s a lot of ownership correlated with other assets, right? So if you’re a hedge fund and you’re getting whacked in your rate position and your equity position and your oil position, you’re probably going to sell some of your crypto as well,” Novogratz explained. “It just takes a while for it to build a more diverse investor base.”
Bitcoin reached a new all-time high in April when BTC traded above $64,000. However, the crypto’s price started to retreat after Elon Musk announced Tesla’s decision to stop accepting BTC as payment due to environmental concerns.
The crypto market declined further as China’s renewed its crackdown on crypto mining and trading. While many institutional investors and long-term holders have bought the dip, it failed to push BTC’s price to previous levels. Investors are also increasingly concerned as global financial regulators have made multiple actions against the crypto exchange Binance, according to Cointelegraph.
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