Mike Novogratz, a billionaire investor and the CEO at Galaxy Digital, has said that the crypto sector is seeing “tons of activity under the hood” and that investors should “stay the course.”
Realizing having tweeted about crypto in a while. It’s a grind. Don’t think we head north for at least a few more months. Always take longer for institutions to move. Very confident they will. Tons of activity under the hood. Stay the course.
— Michael Novogratz (@novogratz) February 1, 2019
The statement of Novogratz comes in a period in which he has doubled down on his confidence in the long-term trend of cryptocurrencies.
During a Gloomy Crypto Bear Market, Novogratz Sees Potential
Throughout the past 12 months, the valuation of the crypto market has declined by more than 85 percent as most crypto assets declined by over 90 percent from their all-time highs.
While the decline in the price of cryptocurrencies has presented investment firms and newly entering companies opportunities to acquire blockchain projects at a reasonable valuation, it has been a difficult period for existing companies and development teams.
Executives have said that it has become challenging to raise capital to maintain operations and consequently, a large number of companies have cut back on their staff and future plans.
CoinList CEO Andy Bromberg stated:
“We had this first wave of massive hype around ICOs in 2017, early 2018, and then a little bit of a pullback. And now in 2019, it feels like people are focused on building… I think the market is going to be quiet for a little bit, while people focus on actually creating things.”
To assist struggling companies in the cryptocurrency industry survive the bear market, Galaxy Digital has reportedly begun to raise $250 million for a credit fund to loan capital to startups at low rates.
Business Insider exclusively reported on January 24 that sources close to the initiative have confirmed Galaxy Digital is moving to help early-stage startups in the sector.
Mike Novogratz like other high-profile investors including Peter Thiel and Tim Draper have recorded large gains over the past several years as early investors in the market.
But, Galaxy Digital reported a net loss of $76.65 million in the third quarter of 2018 and the crypto winter has proven to be grueling for even the biggest investment and venture capital firms in the sector.
Speaking to FT, Novogratz said “it sucks to build in the bear market, sharing the pain of many startups and established companies in the cryptocurrency market.
“[Staff] anxiety levels go up when crypto goes down. In most traditional business, [such as] Goldman Sachs, you don’t worry. There’s not an existential threat out there,” he added.
Despite the underwhelming performance of the industry, on January 2, Novogratz acquired more stake in Galaxy Digital, reaffirming his positive stance on the long-term growth of the cryptocurrency market.
The billionaire founder of Galaxy Digital reportedly acquired $5.5 million worth of shares in the firm, which is publicly listed on the TSX Venture Exchange, bumping his personal stake in the company to 80 percent.
Prospect of Crypto Markets
In the short-term, most investors expect the crypto bear market to extend throughout the first two to three quarters of this year.
But, a fairly large number of major financial institutions, investment firms, and individual investors are continuing to invest in the space, which could lead to a gradual increase in valuation over time.
Featured Photo by christopher lemercier on Unsplash