In an interview on CNBC’s “Closing Bell”, Bitcoin bull and Galaxy Digital CEO Mike Novogratz says liquidity is driving Bitcoin to new heights, pushing the leading cryptocurrency to $10,000, up 40% year-to-date.
Novogratz argues that Bitcoin, as well as the cryptocurrency market at large, is going to be a significant part of the global financial infrastructure, despite crypto exchange hacks and wild price swings that may make some 70-year-old investors nervous. And the emerging asset class won’t wait for the hesitant to fall into line and get on board.
“The one thing that we learned last year with the announcement of Libra is cryptocurrencies, stablecoins, blockchain systems are going to be part of the economic infrastructure of this world and the consumer structure of this world. Most of those are longer term bets – within three to five years, I’m guessing. We’re going to have a Chinese crypto, a Japanese crypto, a US crypto…
The US is falling behind a little bit but the bulk of the technology is still being developed here. The regulators have been slow. Completely slow. And I think, Libra was a kick in the stomach, and said, ‘Hey, we need to take this seriously and figure things out.’
The single biggest concern with US regulators is money laundering, KYC-AML, North Korean financing. We’re going to see something from Treasury in the next few months that puts some guardrails around Bitcoin. I think that’s a positive. I think this as a weapon in macro portfolios is actually happening now.
I used to do meetings and have to convince people how Bitcoin worked and what not. Now I talk about this as a weapon in their macro portfolio, as a hedge against inflation, as a hedge against easy monetary policy and debasement of fiat currencies…
Novogratz says the 11-year-old cryptocurrency has “found a lane as digital gold”, but that lane is long and points to slow adoption. With power players like Bakkt and Fidelity entering the space to provide a safe place for people to store their Bitcoin, Novogratz sees BTC gaining ground psychologically.
“Bitcoin is probably the best new brand of the last 11 years – $200-billion market cap for a line of code that came out 11 years ago. It’s a social construct. It’s nothing technical. We could have taken that same line of code and called it ‘Sarahcoin’ and who knows what it would have been worth. People have believed it’s now a store of value, similar to gold. It’s just that gold has 3,000 years and $10 trillion; Bitcoin has 11 years and $200 billion.”
The former Goldman Sachs partner, who has two Teslas, believes the stock is propelled by a great story, just like Bitcoin, with the electric car company blazing a similar path to BTC, which blew up in 2017 “around a really powerful story.”
— Michael Novogratz (@novogratz) February 3, 2020
“Tesla’s a great story. I have two Teslas. They’re awesome cars…
I think all stocks are going to fly this year. I was thinking back to both 1999 and then 1989 with the Japanese market. When you really get to the end of bull markets, multiples go insane. And these story stocks are really going to go insane.
I think we had that in Tesla. We had monster volume spikes two days in a row, and my guess is, that was the high, at least for a while. We should trade lower over time because you could go online and say the number one search thing on Google was ‘should I buy Tesla’. That’s, in general, a pretty bad sign… right now I’m not long Tesla.”
“When Bitcoin crashed [in 2017] back then, every coin was seen as the next Bitcoin…and so, when you have a supply response like that and the regulators got nervous, you had a 97% collapse.
Coming out of the ashes, Bitcoin has really developed its own lane as a store of value. Where these other cryptos – Ethereum or EOS – there are probably 25 other really credible cryptos. They’re trying to build the blockchain of the future, a decentralized trust layer. That’s more the three-to-five-year bet. I’m surprised at how well they’ve done this year. They’ve actually outperformed Bitcoin, which tells you how much activity is in the space.”
As for the next big Bitcoin price prediction headline, Novogratz says,
“Right now, Bitcoin feels a little frenzied, and we can see it surge up. But I think, by the end of the year, we certainly take out the old highs or at least we go to the old highs. That’s $20,000. We might be there, literally, by the [Bitcoin] halvening, which is in a couple of months.”
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