Michael Novogratz, the founder of Galaxy Digital and former global macro hedge fund manager for Fortress Group, has admitted that the exuberance in crypto got the best of him, and he is factoring in a more realistic outlook on the market. He remains positive on the potential of cryptocurrency and blockchain but has decided to play the long game instead of chasing short term returns, as reported by Reuters, November 6, 2019.
Moderating the Inner Bull
It’s very easy to get caught up in the excitement and adventure of cryptocurrencies, and many investors – retail and institutional – have fallen into this trap.
Michael Novogratz, who shot to crypto fame by announcing he had 20 percent of his net worth in BTC and ETH, has commendably confessed that he may have been “too greedy” in entering and hedging position, which resulted in poor results during the bear market.
Offering his thoughts on recent events, Novogratz believes Libra erred by calling their product s global currency rather than a global payment tool. The word “currency” is psychologically associated with governments and central banks, so Novogratz’s view is valid in light of the emphatic opposition from regulators.
The veteran investor also believes Chinese President, Xi Jinping, essentially legitimized cryptocurrency and blockchain with his recent statements. Although he didn’t mention cryptocurrency and has explicitly warned people not to confuse blockchain optimism with a pro-crypto mindset, Bitcoin surged nearly 40 percent on these remarks.
Rational Markets and Complex Structures
Navigating through the crypto market 5 years ago was completely different relative to the present scenario. As more money, human resources, and attention flows into the space, market structure is promising to become more convoluted.
Cryptocurrency is maturing rapidly, and this is evident from bitcoin price action over the last year. It may be time to take note and follow Novogratz’s lead in fostering rational expectations.
There is no doubt this is still a high growth industry. But the growth rates are on the decline despite remaining incredibly robust. As more time passes and more resources and capital flow into the industry, the size and growth potential of the market will gradually decline.