With just 35 days left for the 2020 presidential elections, Michael Novogratz, the CEO of Galaxy Digital, said being deep in the stock market at this point is dangerous. Despite the greenback’s recent rise, Novogratz said he’s more bullish on Bitcoin and gold and skeptical with the U.S. dollars ahead of the November event.
In an interview with CNN, Novogratz explained that the stock rally the market witnessed in the last few months would lose steam soon. Pointing out that the highs in Tesla and Apple stocks have already been reached, it’s now possible for the Nasdaq to trade lower, somewhere around 10,000 or another 11% down from the current levels, he added.
Novogratz explained that the primary outside factor for the high stock volatility is the upcoming elections. The billionaire said that at some point, it would be okay to buy stocks. But that’s not the case at present, which would depend on who would win the elections. He also said he thinks Democratic candidate Joe Biden would win but the market might not like it, citing some of Biden’s campaign promises. “If Biden wins, he’s raising taxes and he’s raising capital gains tax, most specifically. The market is not going to digest that well,” he emphasized.
Even though Bitcoin is said to be correlated with the stock market, Novogratz thinks the correlation won’t last forever. “To illustrate, if the Nasdaq fell 5% today, bitcoin would probably be lower, not higher. But I think you are going to see those correlations break down,” he told CNBC.
He also briefly touched upon quantitative easing measures, including printing more money to reenergize the economy in the midst of the pandemic. “We don’t know what’s going to happen, the level of uncertainty around the dollar and inflation has to be significantly higher than any in our lifetime sales,” he said.
Gold and Bitcoin are often seen as hedges against inflation. Novogratz said he preferred Bitcoin because it’s still very much earlier in the adoption cycle. He mentioned that while he thinks gold’s price will continue to rise, he expects Bitcoin to increase to $50,000 in the next two years.