KEY POINTS

  • Michael Novogratz said Bitcoin will be pumped by the stimulus and retail investors
  • He expects the stimulus to flow into Bitcoin and gold
  • He predicts Bitcoin will hit $20,000 this year

Crypto investor and ex-hedge fund head Michael Novogratz said the combination of government stimulus packages and a wave of retail investors will allow Bitcoin to hit $20,000 this year.

In an interview with CNBC, Novogratz, founder of diversified financial firm Galaxy Digital, said the upcoming U.S. stimulus package to help revitalize economic activity amid the coronavirus pandemic will provide liquidity that can push Bitcoin and gold higher, thanks to retail investors. Bitcoin recently breached past $11,000, a level it has not revisited in the last 12 months. Gold reached $1,966 and is expected to tip $2,000 soon. 

Novogratz expects money from the stimulus to flow into both assets, Forbes reported. Retail investors, the billionaire said, would send Bitcoin past $14,000 in the next three months up top $20,000 by December. While more institutional investors will buy Bitcoin, he warned they may face “a learning curve” unlike gold, the institutional favorite which has been perceived as a store of value since 600 B.C.

It may be noted that Novogratz said last year that he sold Bitcoin near $14,000. 

The investor’s prediction is similar to other analysts' who predict the bull run will start this year. Bloomberg’s Crypto Market Report said Bitcoin will revisit $20,000 this year. The analyst “PlanB” predicts Bitcoin will reach $30,000 based on his Stock-to-Flow (S2F) model. Beyond 2020, the S2F model predicts BTC will be priced at $288,000 by 2024. 

Timothy Peterson, in his research paper “ Bitcoin Spreads Like A Virus,” said the benchmark cryptocurrency's future price is not random and follows a specific trend affected by its increasing number of users. “The growth rate of users has a considerable effect on the long-term price of Bitcoin,” he wrote, basing it on Metcalfe’s law, the formula that explains that more users create more value.

Bitcoin is trading at $10,935 on Thursday, July 30.

Gold-colored Bitcoin coin on ground Gold-colored Bitcoin coin on ground Photo: André François McKenzie on Unsplash