Billionaire investor Mike Novogratz says bitcoin’s value is a social construct and it would be worth less if governments weren’t printing money like ‘toilet paper’

In this screengrab, Mike Novogratz poses in front of the camera wearing a black hoodie in a park on October 21, 2020.
Mike Novogratz.

  • In a live stream on Wednesday, Mike Novogratz said the true value of the cryptocurrency lies mainly in the community it has built.
  • “The value of bitcoin isn’t the bitcoin code. It’s this social construct. It’s valuable because we say it’s valuable,” he said. “It’s crazy.”
  • He also said bitcoin is more valuable because governments are printing money like “toilet paper.”
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Billionaire investor and long-time cryptocurrency bull Mike Novogratz said the true value of the bitcoin lies mainly in the community it has built, and that it is valuable because people say it is.

Novogratz, the CEO of Galaxy Digital in a live stream with rapper Logic on Wednesday touted the technology underpinning bitcoin but said this would be worthless if no one believed in its potential.

“The value of bitcoin isn’t the bitcoin code. It’s this social construct. It’s valuable because we say it’s valuable,” he said. “It’s crazy.”

Novogratz, whose firm offers cryptocurrency-focused services to investors, said many people have come up to him asking him if he is the CEO of bitcoin. But the billionaire said he just sees bitcoin’s potential, and name dropped other big names backing the cryptocurrency such as MicroStrategy’s CEO Michael Saylor.

“The one thing to remember about the technology, which was cool, is it was the first digital signature you couldn’t counterfeit,” he said. “And so that meant we could have digital money because it could be scarce. If I said they’re 21 million, they’re only 21 million cause you can’t counterfeit.”

He described this as a “profound concept,” highlighting the limited supply of the cryptocurrency.

“You say, well, sounds like a Ponzi, but everything that’s valuable is some form of a Ponzi. It’s valuable because we bring more people in to buy it,” he said. “It wouldn’t be so valuable if our governments weren’t…just printing the money like it’s toilet paper.”

Bitcoin has been trading sideways following the massive crash in May but reclaimed $40,000 this week. Last month’s massive selloff slashed bitcoin’s market capitalization by almost 30% to $766 billion.

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Crypto-linked stocks plummet amid massive sell-offs in bitcoin and ethereum

Bitcoin Bubble
  • Bitcoin and ethereum both fell double digits on Wednesday before a recovery in a dark day for the crypto world.
  • Crypto-linked stocks like Coinbase, Riot Blockchain, MicroStrategy, and more all fell in response.
  • The start of the bear market for crypto came after Elon Musk said Tesla would no longer accept bitcoin on May 12.
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Cryptocurrency linked-stocks plummeted on Wednesday amid massive sell-offs in crypto leaders bitcoin and ethereum.

Shares of the cryptocurrency exchange, Coinbase, fell as much as 10%, while shares of cryptocurrency miners like Riot Blockchain and Marathon Digital Holdings were down as much as 17% and 18%, respectively.

Michael Saylor’s Microstrategy, which just “bought the dip” in bitcoin with $10 million at an average price of $43,663 per coin, was down as much as 15% on the day.

Grayscale Bitcoin Trust sank more than 6% on Wednesday as well, and even Tesla saw its stock drop more than 3% on the dark day for cryptocurrency enthusiasts.

Cryptocurrencies as a whole saw roughly 15% wiped off their total market cap on the day, according to data from CoinMarketCap.com, as altcoins fell in tandem with crypto leaders bitcoin and ethereum.

All of the top ten cryptocurrencies by market cap, except the stablecoins, fell double digits on Wednesday.

The cryptocurrency bear market began on May 12, when Elon Musk tweeted that Tesla would no longer accept bitcoin as a payment method due to the environmental impact of its computational mining tactic for minting new coins.

Then on Tuesday, the Chinese government reinforced its previous ban on financial institutions and payments companies operating in the cryptocurrency business.

The National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China said in a statement that cryptocurrencies “are not supported by real value” and argued speculative trading of cryptocurrencies is “seriously infringing on the safety of people’s property and disrupting the normal economic and financial order.”

The historic single-day fall for cryptocurrencies comes just a day after Galaxy Digital’s Mike Novogratz shrugged off the recent crypto-slump.

“It’s easy to get buried in the volatility of the day,” Novogratz said, according to a transcript on Sentieo, a financial-research site. “Elon Musk’s Twitter comments, bitcoin going down 4,000 points, and everyone starts running around like chickens with their head cut off.”

Novogratz said he expects the total value of crypto assets to triple, or even quadruple, to between $6 trillion and $8 trillion in the coming years.

Read more: ‘Wolf of All Streets’ crypto trader Scott Melker breaks down his strategy for making money using ‘HODLing’ and 100X trade opportunities – and shares 5 under-the-radar tokens he thinks could explode

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Crypto billionaire Mike Novogratz shrugged off the bitcoin slump, defended Elon Musk, and made 3 bold predictions this week

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Galaxy Digital CEO Mike Novogratz.

  • Mike Novogratz dismissed the drop in crypto prices as short-term volatility.
  • The Galaxy Digital CEO took Elon Musk’s bitcoin retreat at face value.
  • Novogratz predicted a greener crypto industry, an ETF launch, and clearer regulations.
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Galaxy Digital CEO Mike Novogratz shrugged off the crypto slump, defended Elon Musk, and made a slew of predictions on an earnings call this week.

“It’s easy to get buried in the volatility of the day,” Novogratz said, according to a transcript on Sentieo, a financial-research site. “Elon Musk’s Twitter comments, bitcoin going down 4,000 points, and everyone starts running around like chickens with their head cut off.”

The billionaire investor said he was taking Musk at his word – that he stopped Tesla accepting bitcoin due to its environmental costs, even though the clean-energy company purchased $1.5 billion worth of the coin earlier this year.

“There’s too much conspiracy-theory stuff going on in the market right now,” Novogratz said, likely referring to claims that Musk purposely manipulated the price of bitcoin with his tweets.

Novogratz also dismissed the ongoing crypto sell-off as near-term volatility, not a permanent decline.

“When you get so much capital flowing into the space, people get too long and then they get scared of something,” he said, adding that it will take years before crypto prices cease to be volatile.

The Galaxy Digital chief made several predictions on the call. He expects Musk’s bitcoin critique to lead the crypto community to embrace clean energy, anticipates a crypto exchange-traded fund (ETF) will be approved in the US within the next year, and expects regulators to clarify the rules around owning and trading crypto in the next six months.

Novogratz suggested those trends could spur more retail and institutional investors to add crypto to their portfolios. He also touted bitcoin as a substitute for gold, the traditional haven asset for investors.

“Gold is the only element on the periodic table that really just gets valued because there’s a social construct that says it’s valued,” he said. “Bitcoin has that space in this universe.”

Moreover, Novogratz described Ethereum as a “web 3.0 bet,” citing the numerous applications it enables. Those include decentralized finance (DeFi), non-fungible tokens (NFTs), stable coins, and central bank digital currencies (CBDCs).

Overall, Novogratz expects the total value of crypto assets will triple, or quadruple, to between $6 trillion and $8 trillion in the coming years.

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Billionaire investor Mike Novogratz admits he was too negative about dogecoin, which his firm says should not be ignored

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Michael Novogratz is the founder and chief executive of Galaxy Digital.

Crypto superstar Mike Novogratz has said he was too negative about dogecoin in the wake of the meme token’s blistering rally.

The billionaire CEO of crypto investment firm Galaxy Digital had long dismissed dogecoin as merely a joke. He criticized Mark Cuban for selling Dallas Mavericks tickets and merchandise in DOGE and last week told people not to buy it.

But on Monday evening he tweeted: “I had been too bearish. Glad I’m not short.”

Novogratz also shared a report by Galaxy Digital’s research arm that said dogecoin “has remarkably strong fundamentals and powerful forces supporting its rise.” It added: “DOGE should not be ignored.”

The report follows a breakneck rally in dogecoin, a cryptocurrency that was created as a joke in 2013. Dogecoin was up 35% on Wednesday to $0.64552, according to CoinGecko, after touching a record high of $0.68602.

It smashed through the $0.50 barrier on Tuesday after exchanges eToro and Gemini on Tuesday said they would launch dogecoin trading.

By Wednesday morning it had risen 1,015% over 30 days and 25,860% over a year, making it the fourth-biggest cryptocurrency by market size at $83.46 billion.

Novogratz’s Galaxy Research concluded in its report that dogecoin remains deficient to bitcoin – the world’s biggest cryptocurrency – in many ways.

“The network’s immaturity is revealed in qualitative factors like a lack of infrastructure and development,” it said, adding that dogecoin’s unlimited supply and lack of use cases dented its appeal.

But it also argued dogecoin is an admirable project that is capable of rallying significant support.

Dogecoin’s appeal lies in the fact that it is a joke “mocking a frothy market with its playful indifference,” the report said.

“In our view, current dogecoin volatility is fueled by mania, but it is likely that dogecoin will continue to be part of this cryptocurrency story over the long run, always in bitcoin’s shadow, but always lurking and periodically outperforming to surprise us all.

“Dogecoin’s longevity is ensured so long as one truism remains: people love a good joke.”

However, many analysts have warned dogecoin and other so-called altcoins remain speculative and highly risky investments.

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Mike Novogratz says Mark Cuban is making a ‘mistake’ by backing Dogecoin – and says banks piling into bitcoin could send it to $500,000

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Mike Novogratz, pictured here with rapper Jay-Z, is a major investor in bitcoin

  • Mike Novogratz said Mark Cuban’s plan for the Dallas Mavericks to accept Dogecoin is a “mistake.”
  • He said the focus should be on bitcoin – which banks are “frantically” getting involved with.
  • Yet many seasoned investors remain skeptical about bitcoin’s uses and volatility.
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Mike Novogratz has said he thinks Mark Cuban is making a “mistake” in letting Dallas Mavericks fans pay for tickets and merchandise in Dogecoin, calling it a “joke” currency.

The Galaxy Digital boss told Bloomberg TV bitcoin is where the action is, saying banks are “frantically” trying to get into the world’s biggest cryptocurrency, and that it could jump to $500,000 by replacing gold as investors’ favored hedging asset.

Mavericks owner Cuban said on Thursday he was taking the “fun” decision to let the NBA team start accepting Dogecoin, the meme cryptocurrency that started as a joke, but has a market capitalization of more than $6.4 billion.

Novogratz criticized the move, saying: “I think Mark’s making a mistake there. He’d be better off with 15 other ways to pay for his tickets.”

He raised concerns that young investors would get hurt by piling into Dogecoin. “Let’s put people in the safest, best stuff, not, you know, these joke coins,” he said.

Novogratz said he thinks bitcoin can soar to $500,000 in the future thanks to a “paradigm shift”, with banks “frantically trying to figure out how to get into crypto.” He┬ácited interest from JPMorgan, which has supported customers investing, and Goldman Sachs, which has reopened a crypto desk.

The Galaxy boss, who is himself a major investor in bitcoin, said it is increasingly being seen as “digital gold” – in the sense that investors want to hold it as a store of value when they expect inflation. He said it is now an “institutional” asset class.

“We are in the middle of a paradigm shift,” he said. “And so bitcoin is wildly outperforming gold even though they’re both hedging the same thing. It’s outperforming because we’re in this once-in-a-generational adoption of crypto.”

Bitcoin was down 4% on Friday to $47,280, more than $10,000 off February’s all-time high. But Novogratz said investors need some “perspective”, flagging bitcoin is up around 60% on the year, while the S&P 500 index is flat.

Many seasoned investors are highly skeptical about bitcoin, however, and are expecting it to plunge again as it did in 2017. They argue it serves little purpose, as it is too volatile to be used as a currency.

In January, Elliott Management boss Paul Singer told clients in a letter reported by Bloomberg he thought bitcoin would eventually falter, bringing about a “we told you so” moment for him and colleagues.

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