Michael Novogratz, the billionaire founder of Galaxy Digital formerly of Fortress Investment Group, has said he has become much more bullish in bitcoin and crypto in recent months.
“I am more and more bullish BTC and our whole space,” he said despite the bitcoin price being down about 74 percent from its all-time high.
Why Investors are More Bullish in Bitcoin Now
In many ways, the crypto sector has demonstrated strong efforts to move towards the right direction to create a more secure, transparent, and regulated market.
Companies like Binance, the world’s largest crypto exchange, stepped up efforts to prevent money laundering with its new partnership with Ciphertrace and Gemini, a major U.S.-based crypto exchange, obtained insurance from Aon to better protect user funds.
Such efforts led to an inflow of capital from accredited and institutional investors who now feel comfortable investing in the relatively new asset class.
Earlier this week, Global Custodian and The TRADE Crypto in partnership with BitGo released a survey that found 141 endowments out of 150 in the U.S. already invested in the crypto market.
Jonathan Watkins, managing editor, Global Custodian and The TRADE, said:
“It’s fascinating to see that despite the widely-publicised concerns around regulation, custody and liquidity, endowments have been factoring crypto-related investments into their allocations, and very few are showing intentions of stepping away. All the talk over the past 18 months has been around when institutional investors will begin participating in cryptocurrency investments, but it turns out they had already arrived, in the form of endowment funds.”
Endowments and institutional investors, in general, are generally considered to be cautious with their approach and often avoid emerging assets like bitcoin unless other major institutions are committed.
This morning our team at Morgan Creek Digital announced a new $40 million crypto venture fund anchored by two public pensions.
The institutions aren’t coming.
They’re already here. 🚀
— Pomp 🌪 (@APompliano) February 12, 2019
It is possible that the entrance of two major U.S. pension funds in February through Morgan Creek Digital opened the floodgates of institutional investors into the crypto market, allowing endowments to become more comfortable in committing to the asset class.
What Will Bring Crypto Out of its Bear Market?
In late 2017, amidst one of the strongest bull markets in the 10-year history of bitcoin, the bitcoin price achieved $20,000.
However, in the following months, the bitcoin price plunged and ultimately plummeted to $3,122.
Speaking to Bloomberg in December 2018, Novogratz said that the cryptocurrency market is sober now and the speculative “drug” has been eliminated from the market.
“That was a drug, and I don’t say that lightly. When you’re in the speculative mania, testosterone is boiling over and there’s a lot of greed. The audience is more sober now—the drug is gone. If anything we’re on the other side, at the stage where there’s the pessimism, and the fear, and the “Oh my God, it’s going to zero.” But it’s not going to zero. We’re at the methadone clinic.”
Don’t understand why all the big macro funds out there don’t have a 1 percent position in $btc. Just seems logical even if your prone to be a skeptic. @RayDalio #goldproxy #animalspirits #greatriskreward
— Michael Novogratz (@novogratz) February 9, 2019
If the previous bull run of bitcoin was led by retail investors and speculative mania, many executives expect the next rally to be led by institutional investors and multi-million dollar portfolios, triggering a new kind of fear of missing out or FOMO amongst institutions.
Novogratz along with other industry executives in crypto including Xapo CEO Wences Casares has said that portfolios should invest up to 1 percent in bitcoin in case it succeeds in becoming a multi-trillion dollar asset like gold.