In a recent Bloomberg Television interview, famed bitcoin supporter Mike Novogratz explains why he thinks Q1 & Q2 of 2019 will be extremely positive for bitcoin. Novogratz, founder and CEO of Galaxy Digital, has previously declared the bottom of the cryptocurrency market, and continues to be bullish on bitcoin.
Mike’s appearance on Bloomberg highlighted the latest news that Fidelity Investments, one of the world’s largest financial service providers, will be launching a cryptocurrency custody service. Fidelity, manager of more than $7.2 trillion in customer funds, becomes the largest financial provider to officially announce a cryptocurrency custody solution - a development Novogratz sees as very bullish.
Financial firms all over the world, he argues, are trying to decide if cryptocurrency is safe asset class to invest in, and custody brings them one step closer to joining the cryptocurrency movement.
“We’ve been saying for a long time that one of the things that will get institutional investors involved in crypto is custody solutions...And they’re coming out with a world class custody solution aimed at institutions...that’s just another check.”
Novogratz also argued that institutions still don’t completely understand cryptocurrencies. Cryptocurrencies are bearer instruments, meaning that users personally hold the assets, and institutions are not used to this. Most of the time, a separate, trusted entity holds assets for investors. Quality custody solutionss such as Fidelity’s, mean that institutions won’t have to worry about losing their cryptocurrencies due to improper key management.
Although this news is exciting for Novogratz, he emphasizes that price might take a while to catch up to the news. Fidelity’s custody product won’t be up and running until Q1 2019, and even then, that doesn’t mean investors will pour in. They’ll want to see Fidelity build a track record first, and as their custody team gains experience, more funds will invest.
Similarly, the CBOE & CME Bitcoin Futures (launched in December, 2017) took a while to build trading volume. Once launched, it took time for investors to become comfortable enough with these instruments to invest considerable capital. These markets have been growing ever since their launch, showing confidence in CBOE & CME’s bitcoin products.
“Everything takes longer than you hope it does. The whole crypto ecosystem is still like a fourth grader…this stuff takes longer.”
With these fundamental developments in mind, Mike Novogratz is cautiously bullish. He admits that his firm is long on bitcoin, but they’re watching the $6,800 and $10,000 levels before being sure that more upward movement is coming: “You gotta take out $6800 first...I don’t see us breaking $10k by the end of the year.”
Starting in 2019, Novogratz thinks the market cycle will reverse, and everyone (institutions included) will be buying bitcoin.