Bitcoin is still on track to hit $500,000 over the next five years, according to billionaire crypto investor Mike Novogratz. He also admitted he was “wrong” about the extent of the leverage in the industry.
Novogratz, the founder and CEO of Galaxy Digital Holdings Ltd, told Bloomberg at a summit on July 19 that demand for the cryptocurrency would be driven by higher rates of adoption and global economics.
‘Bump in the road’
The veteran hedge fund manager was asked whether he believes bitcoin (BTC) could still get to $500,000 in the next five years, as per his earlier prediction in March.
“I do, I do,” he replied, emphatically. “While this [current bear market] is a bump in the road for adoption, it’s certainly not a U-turn. We continue to see institutions in Europe, the Middle East, and the U.S. who haven’t got involved yet looking at this as an opportunity.”
Continuing, Novogratz said:
“It’s not like diving with two feet right now because institutions are a little bit more cautious. But once we get balance, once we get equilibrium and start a new narrative they’ll come back. When I look at the global landscape, I just don’t see how fiscal prudence gets put back into a box.”
Bitcoin surged 9% to $23,600 at the time of press, its highest level in five weeks, according to CoinGecko. BTC has fallen sharply since the collapse of the Terra ecosystem in May, which coincided with a slump in stock markets. It’s currently still 66% off its all-time high of $69,000 which was achieved in November 2021.
Novogratz says he was wrong about crypto leverage risks
Novogratz said that the macroeconomic environment right now would push bitcoin prices higher, as central banks around the world fight inflation, which reached a 40-year high of 9% last month in the U.S.
“We have a debt to GDP at over 140% that almost never ends without a debt restructuring or hyper-inflation…people get really angry when you’ve high inflation. We are in this really tenuous environment,” he said.
Bitcoin has been sold as a store of value, much like gold, but those credentials have come under scrutiny due to its increasing correlation with equities.
Novogratz admitted that he was wrong about the extent of the leverage in the crypto industry, but said the “worst was over”.
“What I don’t think people expected was the magnitude of losses that would show up in professional institutions’ balance sheets and that caused the daisy chain of events,” he said at the Bloomberg Crypto Summit.
“It turned into a full-fledged credit crisis with complete liquidation and huge damage on confidence in the space.” Novogratz was a huge fan of Terra. He even got a tattoo themed around the blockchain’s native token LUNA.
But the collapse of the $60 billion ecosystem in May led to mass casualties in crypto funds, spreading a dangerous contagion that has now claimed some of the biggest companies in the industry: Celsius Network, Three Arrows Capital, and Voyager Digital.
Novogratz blamed regulators for not doing enough to protect investors and allowing firms to take on a huge amount of leverage, Bloomberg reported.
“I don’t know what the SEC should have done…but they didn’t do a lot to protect the retail investors,” he stated.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.