Galaxy Digital CEO Mike Novogratz said that the current bitcoin crash is driven by a “crisis of confidence,” with Strategy and its co-founder Michael Saylor as the key source.
According to Novogratz, Strategy’s sale of 32 BTC–after years of “never sell” rhetoric–shattered market confidence. With unrealized losses of $14B, annual dividend obligations of $1.2B, and STRC preferred shares falling to $74 against a $100 par value, investors see Strategy as a vulnerable player.
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Novogratz also noted that hawkish Fed rhetoric and a strong dollar are adding pressure, and that bitcoin could drop to $45K if it fails to hold support at $59,000-$60,000.
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Strategy as the Source of Bitcoin’s Crisis of Confidence
Novogratz emphasized that Strategy’s first bitcoin sale since 2022 was a psychological turning point. Though the company sold just 32 BTC▼$58,661.00 for $2.5M, it broke Michael Saylor’s long-standing narrative of relentless accumulation. Now, the market fears Strategy may be forced to sell assets to cover STRC dividend payments.
“There’s a sense of vulnerability because of the $14 billion unrealized loss. Markets go to ‘pain points’ and test whether they can break this player,” Novogratz said.
With bitcoin below $60K, MSTR shares have crashed to $82, and STRC is trading at a 25% discount to par. The Rosen Law Firm has opened an investigation into potential securities violations, adding uncertainty. Still, Novogratz believes Saylor is not a forced seller. The company has $1.4B in cash reserves, enough to cover dividends for about 14 months, giving it room to wait out adverse conditions.
Read more: What Does Strategy Do? How Michael Saylor Built a Bitcoin Corporate Empire
How Macro Headwinds and a Hawkish Fed Are Affecting BTC Price
Novogratz also tied bitcoin’s drop to macro factors:
- The new Fed leadership under Kevin Warsh has taken a hawkish stance
- Treasury Secretary Scott Bessent is backing a strong dollar
The U.S. spot bitcoin ETFs have also seen outflows for seven straight weeks. Over the past week and a half, investors have pulled more than $1.8B, adding to market pressure.
Novogratz said bitcoin and gold are in a bearish trend, but he sees little prospect of a sharp drop since a Fed rate hike cycle is unlikely.
Novogratz’s Bitcoin Forecast: $45K or Holding Support?
Novogratz gave equal odds of bitcoin (BTC) hitting $45K and $85K. He sees $59,000-$60,000 as a critical support zone. If bitcoin loses it, the path to $45K and lower opens up. A move toward $55K next week would signal further downside, while a return above $62K would indicate support is holding.
At the time of publication, bitcoin trades at roughly $59,870, down 6.5% on the week.
Novogratz also warned of risks in the tech sector. The AI boom is near its peak, and the upcoming US midterms could intensify anti-AI rhetoric, triggering a tech stock sell-off. He also noted that upcoming Anthropic and OpenAI IPOs would create additional liquidity “funnels,” diverting capital from the crypto market.
