“The economy will collapse,” says Wall Street veteran Novogratz.  “We’re going to go into a really quick recession.”

“The economy will collapse,” says Wall Street veteran Novogratz. “We’re going to go into a really quick recession.”

Veteran investor and bitcoin bull Michael Novogratz does not have a rosy outlook for the economy, which he described as headed for a significant downturn, with the likelihood of a “rapid recession” on the horizon.

“The economy will collapse,” Novogratz told MarketWatch. “We’re going to go into a really quick recession, and you can see that in a lot of ways,” he said in an interview Wednesday, before the Federal Reserve decided to implement its biggest rate hike in nearly three decades.

“Housing is starting to take off,” he said. “Inventory levels have exploded.”

“There are layoffs in several industries and the Fed is stuck,” he said, with the position that “it has to hike.” [interest rates] until inflation is over.”

Central bank policymakers agreed on an unusual 0.75 percentage point rate hike, ending a closely watched two-day policy meeting with a move that would push the Fed’s benchmark rate to a range between 1.5% and 1.75%. while it bolsters efforts to quell an inflation rate that’s hovering around a 40-year high.

It was the central bank’s largest rate hike since November 1994.

Before the Fed announced its decision, Novogratz speculated – correctly, as it turned out – that the central bank would hike rates by 75 basis points and that the market would rally on the news. He also predicted that the shares will sell off in the coming days.

“You are walking into a bubble bursting,” said Novogratz, referring to the rising prices for Swiss luxury watches and other assets.

So far, the well-known investor’s forecast has come true, with the Dow Jones Industrial Average DJIA up +1.00% by more than 300 points, or 1% after briefly hitting 600 following the end of the Fed meeting and a news story Points up Conference hosted by Chairman Jerome Powell began.

The S&P 500 SPX is up +1.46%, up nearly 55 points, or 2.5%.

The Nasdaq COMP, +2.50%, outperformed both, up 2.5%.

On Tuesday, Novogratz, CEO of crypto merchant bank Galaxy Digital BRPHF, +12.33%, drew parallels between the 1998 collapse of the heavily leveraged LTCM fund and the current implosion, which has seen assets like Bitcoin BTCUSD, +3.58% and Ether ETHUSD plays. +3.52% on the Ethereum blockchain.

The collapse of Long Term Capital Management sent shockwaves through global financial markets and ultimately required a multi-billion dollar bailout from Wall Street banks.

Keywords: Crypto Suffers a “Long Term Capital Management Moment”: Michael Novogratz