Novogratz on Bitcoin: 'At Least We Go to the Old Highs' by Year End

Siamak Masnavi
  • 16 Feb 2020

On Friday (February 14), Michael Novogratz, a former Goldman Sachs partner, as well as Founder, Chairman, and CEO of crypto-focused merchant bank Galaxy Digital, explained during an interview on CNBC's "Closing Bell" what's behind the strong price rally Bitcoin has been experiencing in the first six weeks of this year.

Co-anchor Sara Eisen asked Novogratz what was driving the price of Bitcoin.

Novogratz replied:

"... liquidity, liquidity, liquidity. We've got global rates low. People pumping in money. You look at China... nothing's moving in China, which means the government's getting ready for two barrels of liquidity. And so, it's driving stocks, it's driving crypto, it's driving gold."

Eisen then asked:

"So if liquidity is the driver of Bitcoin, why hasn't it just been kind of going up for the last... 11 years every time the Fed goes easy and cuts the rates?"

Novogratz said:

"So, bitcoin's 11 years old. It's found a lane as digital gold. You don't become digital gold right away. And so there's a story of slow adoption. Just last December... Bakkt said we're going to do crypto custody for the first time. Fidelity did the same thing.

"And so all of a sudden there's a safe place for people to store their Bitcoin in the perception of the 50 to 80 year olds who have all the wealth in America. So, we're seeing more and more plumbing built to allow people to feel comfortable buying it."

Eisen, however, was not so sure that it is safe to invest in Bitcoin:

"Is it actually safe though? We've seen hacks; we've seen price swings."

Novogratz replied:

"Remember you got to put [it] in the perspective. Bitcoin is probably the best new brand of the last 11 years."

Co-anchor Morgan Brennan then asked Novogratz what he thinks about the other cryptoassets in the market, e.g. stablecoins that are backed by gold.

Novogratz said:

"The one thing that we learned last year with the announcement of Libra is cryptocurrencies, stablecoins, [and] blockchain systems are gonna be part of the economic infrastructure in this world. And the consumer infrastructure as well.

"Most of those are longer-term bets, right? With three to five years, I am guessing we're gonna have a Chinese crypto, a Japanese crypto, and a US crypto."

Novogratz also talked a bit about upcoming crypto-related regulations in the U.S.

"We're going to see something from Treasury in the next few months that kind of puts some guardrails around Bitcoin. I think that's a positive."

Another subject touched on by Novogratz was the use of Bitcoin as a macro hedge:

"I used to do meetings and have to convince people how Bitcoin worked and whatnot. Now, I talk about this as a weapon in their macro portfolio as a hedge against inflation, as a hedge against easy monetary policy and debasement of fiat currency."

Finally, Eisen asked Novogratz for his Bitcoin price prediction.

Novogratz replied:

"Right now, Bitcoin feels a little frenzied, and we can see it surge up, but I think by the end of the year, we certainly take out the old highs, or at least we go to the old high -- that's $20,000. We might be there literally by the halvening, which is in a couple months."

On January 30, during an interview with Bloomberg Television's Erik Schatzker on the program "Bloomberg Markets, Novogratz talked about why still loves gold and Bitcoin, as well as why he prefers Bitcoin to altcoins from an investment point of view.

"I stil love gold. I still love Bitcoin because because we've got too much liquidity around and we're debasing our currency over time... and so you gotta like gold and you gotta like Bitcoin...

"Bitcoin had its bubble in 2017, and now it has become an asset. It's a weapon in people's portfolio. It is a version of gold -- we call it 'digital gold', and we're putting in plumbing all around the system to allow more and more people to buy it...

"It... doesn't trade like we're in a speculative bubble. It's grinding higher. It jumps a little bit, it recovers... If it hadn't rallied during Iran, if it hadn't rallied during this virus, I'd have been nervous, but it did. And so, I'm getting confidence in the Bitcoin position...

"I think Bitcoin is its own lane as digital gold and by far will have the largest market cap. Listen, gold has got a $9 trillion market cap. The best companies in the world are a trillion. So store of values -- there are very few of them. There's nothing else like gold. The rest of the periodic table from silver to copper and everything else needs a use case. The other cryptocurrencies need a use case, and it's gonna be a few years away, three, four, five years away before you really start seeing the blockchain ecosystem changing the world."