Billionaire Mike Novogratz believes the Bitcoin price will rise if the Fed makes this decision

Mike Novogratz predicts a bullish start for Bitcoin (BTC) as the US Federal Reserve slows its aggressive rate hikes aimed at curbing inflation.

The current cycle has been particularly tough for the first-born crypto, as it suffers from both an unfavorable outlook and the effects of increasing correlation with traditional finance. As a consequence, Novogratz believes the asset will stage a comeback as the bottomless macro climate cools.

Novogratz revealed these opinions while speaking on a CNBC The Squawk Box episode Tuesday. The 53-year-old CEO of Galaxy Investment Partners suggested that Bitcoin lost its status as a powerful hedge against inflation as Fed Chair Jerome Powell began his campaign of rate hikes.

Bitcoin, often referred to as an inflation hedge, collapsed in tandem with other risk assets as the Fed staged its response to inflation. The asset’s recent correlation with traditional finance contributed to the fall.

“When Powell started hitting inflation over the head with a sledgehammer, of course Bitcoin bounced back and so did many assets,” Novogratz noted.

Despite that, the American billionaire and investor claimed that Bitcoin is likely to see a breakout when Chair Powell “giving up the fight against inflation”. According to Novogratz, Powell’s move to fight inflation has a more damaging effect on Bitcoin than inflation itself.

Last month, the Fed raised benchmark interest rates by another 75 basis points in its continued fight against inflation. The move marked the third consecutive 0.75% increase, and the central bank noted that increases could persist going forward.

Interest rate increases do not come without negative effects on the economy and risk assets. In light of this, a UN agency recently issued a report warning the Fed against further hikes.

Anthony Scaramucci doesn’t think BTC is an inflation hedge yet

The “Bitcoin is an inflation hedge” the narrative has seen some objections from crypto critics recently. This is largely due to the asset’s struggle against the recent unfavorable macro-atmosphere. While some crypto followers have held on to this belief regardless, most have had to review the claim.

Two months ago, CEO of SkyBridge Capital, Anthony Scaramucci argued against the claim that Bitcoin is an inflation hedge. According to Scaramucci, the asset is mature enough to serve as a powerful hedge against inflation. He noted that Bitcoin needs to reach a billion in wallet bandwidth to be able to hedge against inflation.

Scaramucci has argued for some time that Bitcoin cannot hedge against inflation yet. Despite that, the former White House communications director remains optimistic about the long-term claim.