Billionaire Crypto Investor Predicts More Volatility in Coming Months

Galaxy Digital founder and cryptocurrency bull, Mike Novogratz, says we've got a bumpy economic ride ahead of us.

During the investor call earlier this month announcing first quarter earnings, Mike Novogratz -- the founder and CEO of cryptocurrency investment firm Galaxy Digital -- stated that the digital asset category needs to buckle up for a choppy economic ride during the next several months.

"Crypto probably trades correlated to the Nasdaq until we hit a new equilibrium," Novogratz was recorded saying from a transcription of the earnings call. "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."

Novogratz is a strong Bitcoin supporter. He recently predicted that the oldest and most valuable crypto will hit a price per coin of $500,000 within five years. However, at the time of writing, Bitcoin is trading on cryptocurrency exchanges for $29,510.48 according to CoinMarketCap -- that's about 95% lower than Novogratz's projected price peak.

Regardless, when it comes to crypto, Novogratz has put his money -- and that of his clients -- where his mouth is. In March 2022, his company Galaxy Digital partnered with Goldman Sachs to offer access to an Ethereum investment fund for Goldman clients willing to pony up a minimum of $250,000, which is the same deal they offer for large investors interested in Bitcoin too. He and his clients are in it for the long haul.

Why is this ardent crypto bull down about short-run prospects?

The main reasons that Novogratz listed for near-term volatility and expected losses across crypto include the six interest rate hikes the Fed announced this year to try and slow rampant inflation. He also said that hiking those rates will disincentivize borrowing by corporations which had used the Fed's cheap -- sometimes free -- money to expand operations or carry on balance sheets to boost earnings.

But that's ending as the newly released minutes from the most recent Fed meetings show that the U.S. Central Bank plans to aggressively accelerate rate hikes until it hits a target of 3.13% by mid-2023. Yet despite that tightening, Novogratz said on the call that such measures are necessary and that he's optimistic about long-term prospects as institutional investors prepare to enter the cryptocurrency market.

"I went to institutional conferences, three or four different conferences meeting with all kinds of accounts. Let me some are the biggest names in traditional finance: BlackRock, Blackstone, Citadel, Apollo all making big efforts in this space having not been here like that. That's a wonderful tailwind for the space," as Novogratz was quoted stating in the transcript.

While future prospects for crypto look good, the sector has lost more than $200 billion in 2022. It's not too far of a stretch to envision things getting worse before they get better.