On February 21, in an interview on CNBC’s “Squawk Box,” hosted by Andrew Ross Sorkin, Galaxy Digital CEO Michael Novogratz shared his insights into the current state and future prospects of the crypto market. The discussion covered a range of topics, from Bitcoin’s price movements to institutional interest in cryptocurrencies.

Bitcoin’s Price Trajectory and Institutional Interest

Novogratz began by reflecting on the rapid ascent of both US stocks and cryptocurrencies, noting the almost too-easy climb of the crypto market. He highlighted the significant institutional interest, particularly from the RIA (Registered Investment Advisor) community, which manages a staggering $42 trillion in wealth. He said this demographic, primarily composed of baby boomers, is increasingly gaining access to Bitcoin through spot Bitcoin ETFs.

The Galaxy CEO underscored the sustained interest from institutional investors, despite potential market consolidations. He emphasized the transformative impact of providing easy access to Bitcoin for a demographic that controls the majority of America’s wealth. Novogratz pointed out the influx of spot ETF buyers, who are not merely traders but long-term holders, thereby reducing market supply and setting the stage for higher Bitcoin prices by year-end.

The Evolving Regulatory Landscape and Its Impact

Discussing the regulatory environment, Novogratz mentioned ongoing conversations with major platforms about enabling Bitcoin purchases, signaling an inevitable expansion of institutional access to cryptocurrencies. He acknowledged the conservative nature of these organizations and the lingering apprehension towards crypto, exacerbated by past volatility. However, Novogratz remains optimistic about the eventual normalization of crypto services, including banking for crypto companies in the US.

Market Dynamics and the Role of Trading Communities

Addressing the trading dynamics within the crypto market, Novogratz pointed out that younger investors find it relatively easy to purchase Bitcoin through various apps. He contrasted this with the more traditional and older demographic that is just beginning to engage with Bitcoin through institutional channels. Despite this, he noted the existence of a vibrant trading community that includes hedge funds and macro traders who actively buy and sell Bitcoin as part of their investment strategy.

Potential Downside Risks and Price Predictions

When asked about the downside risks for Bitcoin, Novogratz suggested a potential drop to levels around $45,000 to $42,000, possibly triggered by regulatory challenges or market overextension. However, he views such a scenario as having a low probability. Reflecting on Bitcoin’s resilience, Novogratz highlighted the strong belief system within the crypto community that supports the asset through volatility.

Looking ahead, Novogratz responded to Tom Lee’s prediction of Bitcoin reaching $150,000 by the end of the year with caution, emphasizing the difficulty of making precise price predictions in a market welcoming new buyers. He anticipates testing previous highs and possibly achieving significant milestones, depending on macroeconomic factors and the Federal Reserve’s monetary policy.

The Intersection of Bitcoin and Macroeconomic Trends

Novogratz concluded by discussing Bitcoin’s dual narrative as both a macro asset influenced by broader economic policies and an asset still in its early adoption phase. He stressed the current dominance of the adoption narrative, driven by new institutional entrants and the growing recognition of Bitcoin as a legitimate hard asset.