Novogratz says bitcoin, real estate can protect investors against central bank mistakes

Published Tue, Oct 4 20229:41 AM EDT

Jesse Pound @/in/jesse-pound @jesserpound

Billionaire investor Michael Novogratz said Tuesday that he still believes bitcoin is a savvy investment for people looking to guard against mistakes made by policymakers. Novogratz, the founder of crypto investment firm Galaxy Digital, said on CNBC's " Squawk Box " that he thought October would be a "reversal month" for markets but that investors should look to bitcoin and hard assets to guard against further mistakes from central banks and governments. "It's frankly why you should be long bitcoin and hard assets like real estate. When people print too much money, at one point, you see a breakdown in confidence. We saw it in the U.K., briefly. ... When confidence goes, people look for other assets," Novogratz said. Overseas, the Bank of England had to implement emergency bond buying last week after a government budget proposal appeared to spark chaos in the London gilt market. The episode has raised concern that further tightening by global central banks will cause still more cracks in the financial system. As inflation has jumped to 40-year highs in 2022, bitcoin has struggled and is down roughly 70% from its highs late last year. At times, bitcoin has traded similar to tech stocks. In fact it peaked at roughly the same time as the Nasdaq Composite. Parts of the real estate market have struggled as well, especially areas tied to office workers. Novogratz said that the digital token's reaction to Fed tightening doesn't prove that bitcoin is not an inflation hedge. "When Powell started beating inflation over the head with a sledgehammer, of course bitcoin came back down, as did lots of assets. If he flinches, if he gives up this fight against inflation before inflation comes down ... you're going to see bitcoin and other assets take right back off," Novogratz said. The Federal Reserve has hiked rates by three-quarters of a percentage point at three consecutive meetings since June, bringing its benchmark interest rate to its highest level since 2008. The central bank has signaled that it expects more rate hikes in the coming months. Bitcoin was trading at just over $20,000 on Tuesday morning, according to CoinMetrics.