Take It From a Pro: Billionaire Investor Mike Novogratz Still Confident about Crypto
Mike Novogratz, a prominent crypto investor, billionaire, and CEO of Galaxy Investment Partners is still confident about the long-term adoption and value of cryptocurrency, despite recent price drops across most major cryptocurrencies.
Following sudden price drops for Bitcoin and Ethereum, and others, it’s understandable if some people are nervous about crypto right now. Two weeks ago, Bitcoin was trading close to $60,000. Now we are looking at some upward momentum getting it on the way back to $40,000. Other cryptocurrencies have taken similar price drops.
However, those with the most to gain and lose, such as billionaire, Mike Novogratz, are confident about the future of the market and sector.
Mike Novogratz: a Successful Crypto Investor
Mike Novogratz has been an investor for a long time. He knows money. He knows how big firms and institutional investors, such as hedge funds operate, and how hedge fund managers think. Novogratz made his first fortune the traditional way, as a bond trader for Goldman Sachs in 1989.
He worked his way up to partner in 1998, from Tokyo to Hong Kong, generating a lot of profit and returns for Goldman Sachs during a period that involved numerous ups and downs, with considerable boom times amongst the markets of the so-called Asian “tiger economies.”
He continued to do that in senior positions in Latin America and Asia for several more years, before joining Fortress Investments in 2002. He served as a macro fund investment partner for them, helping Fortress take it public in time for the global financial crisis of 2007-08. He had achieved billionaire status before the financial crash, and it’s thanks to his long-term interest in cryptocurrency and related investments that he has once again reached billionaire status.
In 2017, Novogratz took a serious interest in cryptocurrency. It didn't take long for the skilled and experienced investor to establish Galaxy Investment Partners, a specialist cryptocurrency investment firm. In 2017, he said that 20% of his net worth — at that point around several billion dollars — was in cryptocurrency, and in 2016-17, he made $250 million that way.
A significant Galaxy investment was in Bitfury, in 2017, whereby they were part of an $80 million funding round. Since then, Galaxy Investment Partners have made numerous other investments, whether directly or through ICOs and IDOs, and overall activity and confidence from them has remained high, despite numerous market ups and downs.
Recent Crypto Comments from Mike Novogratz
Mike Novogratz has been speaking in the media recently, most notably to US media giant, CNBC. In press interviews and statements, the CEO of Investment Partners has said this is a “liquidation event” and temporary setback, but not the same as what happened after the last crypto boom in 2017 - 2018.
Liquidation events happen in every financial market, in every sector, and it usually happens when enough investors feel a market, asset, or investment has reached a peak. Once that happens, and a sufficient number of people start selling investments/assets, thereby “cashing out”, a market or the price of something starts to fall. When enough momentum builds up, the overall price of that asset or market drops enough for others to notice, and then the price of an investment can and does decline, as has happened in this case.
Overall, however, he says “the crypto revolution has happened”, and this setback is not going to change that. Novogratz still has every confidence that the market will continue to recover, get back to the previous highs, and go beyond that next time.
Novogratz says it will take time, of course. “Humpty Dumpty never gets put back together in two days … when he cracks. It’s going to take a while. The market will consolidate”, he said on CNBC.
Explaining what happened in more detail, Novogratz said: “ A lot more people own crypto. Crypto has seeped into pockets all over our society and you had a confluence of events — a combination of tax day, Elon Musk tweets, whatnot, where you started breaking down the positivity in the price action, and now we’ve got a liquidation event.”
However, overall he has every reason for long-term confidence, including the support and continued interest in DeFi amongst the tech sector, and as an investment asset from institutional investors. He went on to say: “The story hasn’t gone anywhere. This crypto revolution has happened, but these are certainly setbacks for the wallets and for the investor base. People lost a lot of money, so they’ll dust themselves off.”
Long-Term Cryptocurrency Predictions from Mike Novogratz
Galaxy has positioned itself, as an investment firm, as the “bridge between the crypto and the institutional worlds.” Which means, Novogratz and his team understand them both and have played an instrumental role in encouraging institutional investors, the big banks and hedge funds, in adopting cryptocurrency options as investment vehicles.
Galaxy (trading under the name Galaxy Digital) has a $325 million EOS VC fund, with money having gone into hundreds of companies. They also offer a wide range of mining, investment banking, lending, trading and asset management options, for direct investors in the fund, and those who trade through them. At present, Galaxy has $1.6 billion assets under management, has made 80 direct investments, and has 300 institutional trading counterparts, generating returns from the 5 main strategic areas of investment operations.
Based on their extensive knowledge of the market (crypto and traditional finance), with a management team from Goldman Sachs, Blackrock, Fidelity, and Google, Galaxy is confident in its prediction that within 5 years, “91% of institutional investors” will have “digital asset exposure.” That means, all of the big banks and investment firms, hedge funds and pension funds, will have invested something, or have investment vehicles set up to allow investors to put money in and generate returns from cryptocurrencies and other digital investments.
Galaxy is pioneering the way, encouraging institutional investors to invest alongside them, in their own funds, or as a trailblazer, Galaxy are setting an example that financial firms need to follow. Partly thanks to the prominence of the CEO, Mike Novogratz makes it difficult for Wall Street firms and brokers to ignore the potential of cryptocurrency.
Especially when you look at the results, the numbers. Which ultimately is how the success of Galaxy will be measured, as is the case with any financial fund, firm or investment company. Most have much larger funds (assets) under management; but that’s understandable when what they’re investing in (cryptocurrency) still isnt a mainstream asset class, as far as Wall Street is concerned. However, how many can boast of such an exponential growth rate?
According to the latest investor presentation document, Galaxy Digital Net comprehensive income grew from $336 million in Q4 2020 to $860 million in Q1 2021. An impressive growth rate by anyone’s standard, especially traditional Wall Street investment firms!
Galaxy Digital offers the following services and business units:
- Asset Management: Active and passive strategies providing diversified, institutional-grade fund product offerings
- Trading: Market-leading sell-side trading desk offering spot & derivative OTC trading, lending and structured products
- Investment Banking: Full lifecycle financing, strategic advisory, and general corporate services for blockchain & digital asset companies
- Mining: Newest segment focused on bitcoin mining, with both proprietary mining operations and bespoke financing for miners
- Direct investments in early-stage and late-stage venture, liquid cryptocurrency and digital assets, and special situations
When it comes to asset management, for example, Galaxy already has six funds, with $1.6 billion worth of assets under management. Three of these funds are connected to Bloomberg, and are public funds. One is publicly traded on the Toronto Stock Exchange (TSX), whereby Galaxy serves as a subadvisor. The other two are private funds, with one that has invested $295 million in hyper-growth startups, and due to its ongoing success, a second fund is being established.
For a company making such commitments and investments, Novogratz is clearly confident in the long-term prospects and potential for cryptocurrency and companies in this space.
Ultimately, the recent crypto price drop is being viewed as a short-term setback by someone who's very much in-the-know, and has a keen understanding and appreciation for the market. Novogratz is a billionaire with real and large investments in cryptocurrencies, and numerous crypto-based projects and startups, through his investment firm, Galaxy Investment Partners.
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