Novogratz Predicts One of the Most Important Years for Crypto

Let's, start with this environment right now, uh, which last time you were with us, we talked about the low rate environment, how it's, pushing a lot of people into different assets, but um. What has it meant? Do you think, in terms of the viewpoints on cryptocurrencies? So listen, you know crypto like any uh.

Any of the other speculative assets has benefited immensely from a perception of zero interest rates forever and central banks just jamming liquidity in, like they're trying to feed a foreground duck.

You know you're, you're. You're jamming the food into the into the duck and um, and so we've. Seen a a nice move in the bitcoin price, we've, seen a stellar move in the ethereum price. That's based around this, burgeoning new space in crypto, called decentralized finance and what you're, seeing in d5, which is really interesting, is really reminiscent of what you're, seeing in tesla just a speculative frenzy.

There are new projects that are doing really cool things, but they're. Getting such a surge of liquidity so fast uh. It's. Changing at a speed i've, never seen in markets. There was a new project called sushi that was only launched five days ago and it's over a billion and a half dollar market cap in five days, and so that worries me some, you know it's while it's early in d5 to see speculative frenzy, like that, i mean, i think, about tesla today, right tesla's, a stock that's up 600 on the year that's trading at over a thousand times earnings.

Uh was up 13 yesterday after being up 70 because of a split and they announced they're gonna sell five, you know billion dollars worth of stock and the market wants to trade up. You know that's. The power of this frenzy, we're in right now, uh it's.

It's, irrational exuberance, you can call it. What you will. I'm, a little worried that we're gonna. Have a big correction in a lot of risk assets soon, um, i don't, think it's, a correction that lasts for that long, because the liquidity machine's not being turned off, but i think we're gonna go through a series of these bubbles and it feels close to being at peak bubble right now.

Well, there's. There's, a lot to unpack in what you said there mike. Let me start just with the digital asset, part of things, because a lot of people are just starting to get their head around bitcoin.

Even though there's been a very long dialogue taking place on that cryptocurrency for many years, but you looted the fact that you know you're, seeing a lot of digital coins very quickly, um, created and well received in the market.

In fact, our partners at bloomberg just put out a story about hundreds of coins being created, and they they referenced a few others like pork chop and spaghetti and whale um. It sounds like you say that that caution's.

The key word with some of these new, the these new coins: what what & #? 39 s, your ultimate takeaway for investors on these new names, these new coins that are coming to market you know do your work, have fun, be careful uh, listen! I i lived through and profited through the 2017 crypto bubble, and this feels somewhat reminiscent to it.

Uh there it was the icos back, then you know a new ico every day and the herd would would swim to that ico and jam. The price up and there'd, be a frenzy of liquidity and price, and then it would collapse and they'd, move on to the next thing, and it feels a little bit like that.

I i think d5 is going to be around longer. I think that you are building infrastructure, you know compound might exist in 20 years and we might trade interest rates, not a jp morgan, but on compound or some decentralized uh baby.

But this is still: we're, a sandbox right now and it's, a sandbox that's, getting liquidity like it's, an adult industry, and so it's. It's. It's, be very careful um. What's? Interesting? Is the bitcoin.

The new bitcoin buyer uh is an institutional buyer. It's, a high net worth buyer. They're coming in methodically and slowly uh and they're, not stopping, and so that's. Keeping the bitcoin price up a lot of the traditional crypto people right are selling their bitcoin uh, buying the sexier, sexier objects, and so in this move of this kind of mania, which we're, seeing in decentralized finance, uh it's.

Pushing ethereum price up because it's, built on the ethereum network and other protocols. It's, probably putting a little head a little weight on bitcoin, which tells you how powerful bitcoin is that, even with that selling pressure, it's still going up based on the macro story.

It's all helpful context. Mike, i think it's. Also, since you mentioned tesla it's worth talking about. You know the skeptic would say look, this is this is crazy all this money, flooding into tesla, others would say tesla because of the company and elon musk uh in uh, and the pop culture phenomenon around him has actually introduced a lot of new investors to the Stock market um, what about in the cryptocurrency world, where you've got increasing players, i mean even here in canada, you & # 39.

Ve got players like wealthsimple, which have you know allowed for more crypto trading within portfolios. You've, got publicly traded businesses like yours, galaxy digital, which is sort of essentially a way by which investors to have some some direct or indirect exposure to what's going on here.

Um are those who sort of dismiss the cryptocurrency story missing um. What some have really been embracing, listen cryptocurrency is here for good, and so i couldn't say that in 2017 2018 uh, that sentence comes with an exclamation point starting this year.

Right we we crossed the rubicon. Bitcoin is not going away. Uh, the ethereum project is not going away, it's got critical mass uh and you're, going to continue to see innovation after innovation. I would still tell you that while bitcoin is a finished product as a store of value as a digital gold, the rest of crypto, you need to put into the broad venture bucket it's, still a sandbox.

There are experimentation there. There's, spectacularly cool innovations happening, but we're really really early. I love all the new access points. I love all the new participants, people understanding how it works, and i am positive.

In 10 years, the ecosystem around cryptocurrencies bitcoin ethereum the whole space blockchains, is going to be multiple times bigger than it is today, and so that's, a big deal and that's. Why? I think this will be one of the most important years in the space it still doesn't mean that from time to time the speculative frenzies get carried away.

I love. I have owned two teslas. I think it's. One of the best auto companies in the world - i think it's, going to be around for a long long time and i think elon's, a genius it doesn't warrant, a 500 billion dollar market cap trading.

At you know, 1 300, you know times earnings it. Just doesn't and we will look back at this episode in tesla in the textbooks of one that goes up with tulips and you know 1999 uh detect bubble. This is a tesla bubble.

Uh is it going to pop today tomorrow, the next day i don't know it's going to pop soon uh, because they're. Just too many markings of you know what a top looks like, and so you know i'm, trying to stay as optimistic and bullish as i can on crypto, because it's really early in the cycle, but give the warning that You know there are other things in the markets that have me worried mike.

We only have about a minute left, but since you talked about digital gold, a lot of our audience this year has been looking to gold, especially given the macro environment around the world. Now, last time you're with us, you weighed in on gold versus bitcoin, but in our last 30 seconds here.

What would you say about your outlook for gold? I still love gold uh. You know if i'm, a longer term holder. I think it's, going much higher uh in the short run. You know we're at this 2000 mark uh the dollar euros at 120.

Today, you could see a pause. You could see a pause if, if risk assets correct - which i think they will all of this stuff - is going to come down a little bit, but the main story is not going away. The basement of fiat currency is going to drive the price of gold higher.

So i'm, not selling my gold uh. I don't trade, it as actively as i trade other things. I think gold is going to be three thousand dollars uh. You know 12 months from now or 2800 or significantly higher