As Bitcoin roars back after a year of crypto industry scandals and losses, Mike Novogratz says one man in particular gives him reason to stay bullish.
“The most important thing that happened this year in Bitcoin is Larry Fink,” Novogratz said, referring to the investment titan who is chief executive officer at BlackRock Inc., the world’s biggest asset manager.
BlackRock thrilled the crypto community in June when it applied to launch an exchange-traded fund to track the spot price of Bitcoin — a move that, if approved, could potentially spark a new wave of investment in the cryptocurrency. But it was Fink’s seeming conversion from crypto skeptic to Bitcoin believer — he now considers it an “international asset” — that really has Novogratz excited.
“He got ‘orange-pilled,’ as we say. Orange pill is when you take a nonbeliever and you make them a believer in Bitcoin,” Novogratz, CEO of Galaxy Digital Holdings, told David Rubenstein in an interview this week for an upcoming episode of Bloomberg Wealth. “Larry was a nonbeliever. Now he says, ‘Hey, this is going to be a global currency.’ People around the world all trust it.”
BlackRock’s ETF push and Fink’s evolving attitude are part of an “adoption cycle” that Novogratz said may help the coin top its all-time high of nearly $69,000 reached in 2021 — especially when it’s accompanied by an eventual Federal Reserve pivot toward cutting rates. This week, Bitcoin hovered between $29,000 and $30,000 after soaring more than 70% year to date.
Novogratz, in a wide-ranging conversation at Galaxy’s offices in lower Manhattan, also said a recent ruling in the Securities and Exchange Commission’s case against Ripple Labs represented a “huge victory” for crypto, and touched on topics ranging from Sam Altman’s eyeball-scanning Worldcoin project to Galaxy’s commitment to keeping a presence in New York.
One of the most vocal crypto advocates from Wall Street, Novogratz, a former partner at Goldman Sachs Group Inc. and Fortress Investment Group, first bought Bitcoin when it was trading at about $100. In 2018, he founded Galaxy Digital, which provides financial services such as trading, investment banking and asset management in the crypto industry.
Novogratz’s reputation took a hit last year when a crypto project he supported, the Luna token invented by South Korean entrepreneur Do Kwon as part of an experiment in algorithmic stablecoins, blew up, triggering a series of collapses in the industry. The now-infamous tattoo on his arm — a wolf howling at the moon with the word “Luna” — serves as a “good reminder of hubris,” Novogratz said.
AI Hype
His advice today, for someone who has $100,000 to invest: “If they were young and had a high risk tolerance, I’d be buying Alibaba stock. I’d be buying silver, gold, Bitcoin and Ethereum. That’d be my portfolio.” Those with lower risk tolerance should put 30% in a portfolio like that and 70% in bonds and perhaps an index fund, he said.
Asked if Worldcoin would take off, Novogratz said “you don’t want to bet against Sam Altman right now.” (Altman, co-founder of Worldcoin, is also behind the artificial intelligence sensation ChatGPT.) Worldcoin uses a small device called an “orb” to scan people’s eyeballs in order to generate a a unique digital identity for online use. A token issued by the project more than doubled in value at launch this week, before retreating from those highs. It traded at $2.20 as of 6:30 p.m. on Friday in New York.
“I think the price potentially can go a lot higher, because there’s an AI hype cycle,” Novogratz said. “I don’t know if we will all use that as our identity.”
This year, a flurry of enforcement actions by the SEC against the biggest crypto firms has rattled many in the industry. Novogratz said the recent court ruling in the SEC’s suit against Ripple — the judge declared that Ripple’s XRP token was a security in some instances but not in others — delivered a victory to the crypto industry because it proves that “the rules are nothing close to clear.”
As for Galaxy itself, even as it moves parts of its business offshore, it remains committed to New York. “I don’t see us not being in the US or being in New York,” Novogratz said.
To see the full interview with Novogratz, watch Bloomberg Wealth with David Rubenstein on Tuesday Aug. 8 at 9 p.m. NY time on Bloomberg Television.
