Galaxy Digital Chief Predicts Crypto Mayhem Might Not Be Over — Here’s Why

Updated by Kyle Baird
In Brief
  • Michael Novogratz is expecting that the virtual asset market will be “volatile and difficult” for the next few quarters.
  • In the Q1 earnings call, the Galaxy Digital founder commented that the stock-crypto correlation will be weighing down the market some more.
  • Galaxy Digital Holdings Ltd. posted a net comprehensive loss of $111.7 million in Q1 2022.
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Galaxy Digital CEO Michael Novogratz is expecting that the virtual asset market will be “volatile and difficult” for the next few quarters after posting weak results in Q1 2022.

Novogratz iterated these sentiments during the Galaxy Digital earnings calls and added that the stock market and crypto correlation will likely be weighing down the crypto market for some time.

He said, “Crypto probably trades correlated to the Nasdaq until we hit a new equilibrium. My instinct is there’s some more damage to be done, and that will trade in a very choppy, volatile, and difficult market for at least the next few quarters before people are getting some sense that we’re at an equilibrium.”  

BTC-Nasdaq volatility might breach $30,000

In a recent report, Bank of America analysts had also called Bitcoin a risk asset, questioning its status as an inflation hedge due to its high correlation with the stock market.

While the Nasdaq was down amid weak broad market sentiments, Bitcoin experienced a 10% fall on May 9. BTC dipped below the $31,000 level, as the digital asset market lost almost half a trillion in cumulative market cap, as per data available on CoinGecko.

Galaxy Digital chief also predicted in an interview with Bloomberg TV that Bitcoin will hold the $30,000 line if the Nasdaq Composite holds above the 11,000 level. However, in another interview with CNBC, the executive had remarked, “I do think there’s more pain to come,” adding that Nasdaq might even touch the “final destination” of 10,000. And if that happens, Bitcoin could slide under the crucial level of $30,000, according to Novogratz.

Weak financial numbers for Galaxy Digital in Q1

Novogratz’s comments also come at a time when Galaxy Digital Holdings Ltd. posted a net comprehensive loss of $111.7 million, compared to an $858.2 million gain in Q1 2021. The company underlined the reason for the grim numbers, adding, “The decrease was primarily related to unrealized losses on digital assets and on investments in our Trading and Principal Investment businesses, partially offset by profitability in our Investment Banking and Mining businesses and lower operating expenses.”  

Additionally, Galaxy Digital Asset Management reported assets under management (AUM) of $2.7 billion as of March 31, 2022, which is a 5% quarter-on-quarter fall.

At the time of press, Bitcoin is trading for $31,200 — down 55% from its November 2021 peak of over $69,000. 

And in this market, the depegging of UST and the subsequent decision of Terraform Labs (TFL) to liquidate BTC wallets has played a role. Meanwhile, Novogratz opined, “They [TFL] are defending it. We will see how it goes. Certainly, it’s not good for the overall ecosystem if it doesn’t go well,”

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