Mike Novogratz, CEO of Galaxy Digital, predicts that Bitcoin may undergo a correction before potentially reaching a new all-time high.

Novogratz anticipates a pullback in the cryptocurrency’s price, possibly dropping to the mid-$50,000 range, before embarking on another upward rally later in the year.

Bitcoin’s recent surge has shown signs of slowing down, with some traders cautioning against the unsustainable pace of the rally. Among those voicing concerns is Mike Novogratz, who suggests that Bitcoin could experience a correction and consolidation phase before resuming its upward trajectory toward new record highs. He suggests a potential dip to the mid-$50,000s before another surge.

Despite a recent 20% increase in Bitcoin’s price, reaching beyond $60,000, much of the surge is attributed to the inflow of funds into spot Bitcoin ETFs. Novogratz interprets the approval of these ETFs as pushing Bitcoin into a phase of price discovery, leading to increased market frenzy. However, he warns that the market may have become overheated.

Bitcoin’s price surged by over 5% to $63,649 on Thursday, following a volatile trading session where it briefly surpassed $63,968 before retracting below $59,000. The recent price movements draw parallels to the trading environment during Bitcoin’s previous all-time high in November 2021, prompting speculation about the beginning of a new bull market for cryptocurrencies.

Concerns have arisen regarding a potential liquidity crisis, with over half of the circulating Bitcoin remaining stagnant for over two years. However, Stephane Ouellette of FRNT Financial suggests that fears of a liquidity crisis are exaggerated, as short-term holders are beginning to sell their positions.

Data indicates extreme levels of unrealized profit margins for short-term crypto holders, along with rising costs for opening new long positions in Bitcoin’s perpetual futures markets. Historically, such conditions have preceded pauses or corrections in Bitcoin’s price.