Novogratz Still Confident in Crypto, Anticipates Growth in Security Tokens
Michael Novogratz, former Goldman Sachs partner and founder of Galaxy Digital, said that his crypto merchant bank was negatively impacted by the recent crash of the crypto market.
Billionaire and crypto believer Michael Novogratz is still confident in the cryptocurrency market despite its current bearish trend. On Tuesday, Bloomberg published an interview with the founder of crypto merchant bank Galaxy Digital Holdings, where he explains his current position on the crypto space. Novogratz, a former hedge fund manager, was surprised to see Bitcoin dropping below the $6,000 level, and he is probably not alone.
“I did think Bitcoin was going to hold at $6,200. It stayed there for four months. It felt like the selling was finished. But then Bitcoin Cash decided to fork again. At the same time the SEC came out and sanctioned a few ICOs [initial coin offerings] and said, ‘Oh, by the way, your investors can sue for damages.’ That scared the heck out of a lot of people,” the billionaire explained.
At the end of November, his Galaxy Digital reported $136 million losses in the last nine months. Novogratz was ready for the first bearish wave, which started when Bitcoin left its year-to-date peak. He said that he believed that the crypto space could be a genuine structural shift in the world and that he could successfully hedge his portfolio, which he actually managed to do during the first long-term bearish movement. However, when the crypto market started to suddenly crash in mid-November, many investors, including Novogratz, were not ready, which was a real pain and still is.
When asked if initial coin offerings (ICOs) would ever come back again, Novogratz said that the ICO market was already dead. Indeed, the ICO space has seen a lot of fraud, which discouraged many investors.
“There was a lot of fraud, and there was a lot of hype, and people lost money. The SEC was behind the curve, so they slammed on the brakes. But the SEC doesn’t want to kill this innovation; we’ve spoken to them at length. I think you’ll see a market for security tokens—a real estate portfolio that gets tokenized, for example,” Galaxy Digital CEO said.
“These aren’t things that go from $1 to $1,000. They’re things that yield 14 percent, and they’ll be sold to qualified buyers. That sounds a heck of a lot less sexy, but you’re going to see that business grow,” he added.
Novogratz is not the only one to anticipate an expansion of the security token industry. After the hype around ICOs faded, many institutional investors regard security tokens as the next megatrend.