Galaxy’s Novogratz: Macro factors, ‘boomer’ wealth to spur more crypto adoption

Bitcoin has “a whole new set of salespeople” after the ETF approvals, Galaxy Digital’s CEO says — though “the rest of crypto is still a regulatory tug of war”

share

The approval of a bitcoin ETF is likely just the start of accelerated crypto adoption, according to Galaxy Digital CEO Mike Novogratz — particularly as the US debt level rises and the Bitcoin halving looms. 

Still, regulatory hurdles for the segment remain, the executive noted.

Novogratz pointed to the US’s national debt of more than $34 trillion — a number that has risen by about $1 trillion in the last few 100-day periods. 

“Until the United States and other countries get their…finances in order, the story for bitcoin and other digital assets is going to continue to grow,” he said during the company’s Tuesday earnings call. 

Read more: Debt ceilings and defaults: A return to bitcoin as a safe asset narrative?

Bitcoin (BTC) which has a finite supply, has historically acted as a hedge against currency debasement. Its price rose above $71,000 on Tuesday morning. BTC stood at roughly $70,400 at 12 pm ET — down nearly 5% from its all-time high set earlier this month, but up 4% from a week ago.

“The [crypto] story’s powerful right now, and it’s got a whole new set of salespeople,” Novogratz added. “With the [bitcoin] ETF, we’ve opened up the $80 trillion baby boomer giant bulk of wealth in the United States.”

Read more: Bitcoin ETF catalyzing broader merge of TradFi, crypto: BlackRock exec

Galaxy launched a spot bitcoin ETF with fund giant Invesco in January. The Invesco Galaxy Bitcoin ETF (BTCO) was one of 10 such US products to launch at that time, and the segment has so far notched about $11.3 billion of net inflows.  

BTCO managed $383 million in assets, as of market close Monday, according to BitMEX Research data. Funds by Grayscale Investments, BlackRock and Fidelity dominate the segment, accounting for nearly 90% of the category’s roughly $58 billion in assets under management.

The fund by Galaxy and Invesco was one of four ETFs approved earlier this month by Cetera Financial Group, a wealth management firm with $190 billion assets under management, as of Dec. 31. 

“It’s only been two months since the regulatory green light, and these products take time to attract assets,” Galaxy Digital president Chris Ferraro said on the earnings call. “We’ll need to allow the market dynamics to play out, but we are particularly excited by the long-term potential for adoption within the US wealth channel.”

Easier access to bitcoin via the ETF is set to coincide with the bitcoin halving next month — when per-block mining rewards are set to drop from 6.25 BTC to 3.125 BTC. Such an event creates “a good supply-demand imbalance,” Novogratz added.   

Read more: The next bitcoin halving is coming. Here’s what you need to know

While the Securities and Exchange Commission’s approval of bitcoin ETFs legitimized that asset for a new segment of investors, “the rest of crypto is still a regulatory tug of war.”

The SEC is set to rule on spot ether ETFs in May, though many industry watchers are bearish on the possibility of those getting cleared to trade. 

While the SEC has let bitcoin-focused companies go public in the US, Novogratz said, the SEC has not yet allowed Galaxy Digital to do so. The company will continue toward that long-time goal despite what executives have so far described as a “frustratingly slow” process. 

Novogratz said until there is a change in SEC leadership — the firm “can be hopeful, but not optimistic” of getting cleared to become a US public company.

The upcoming presidential election in November is likely to spur leadership turnover at various government agencies, no matter who wins, the Galaxy executive added. 

“A year from now — assuming I’m right and we get legislation passed in the US and a different tone out of the SEC — this industry’s going to be a lot bigger,” Novogratz said.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

ao cover.jpg

Research

Arweave recently launched the testnet for AO computer, a new messaging protocol that will sit atop a PoS network and aims to become a scalable global compute platform through parallel processing and modularity.

article-image

The US spot bitcoin fund category has notched negative net flows over the course of a week just three times since coming to market in January

article-image

Elsewhere, rank-and-file employees move around and Binance’s head of legal in Europe departs

article-image

Plus, a Dragonfly partner shares his view on the crypto VC market, and a mining hardware firm raises $80 million

article-image

Plus, a Bored Ape burger restaurant closes, and Crypto: The Game presses on

article-image

Bitcoin scarcity is a meme, with or without the halvings

article-image

The current state of blockchain interoperability poses an existential threat to the mainstream adoption of blockchain technology as a whole