Bitcoin (BTC-USD) is back. The most popular cryptocurrency has breached $19,000 and is approaching the record high it touched in 2017, before a spectacular crash. Longtime bull Mike Novogratz said bitcoin is a solid buy for everyday investors.
“Bitcoin is for everyone,” he said in an interview with Yahoo Finance Live. “Everyone should put 2% to 3% of their net worth in bitcoin and look at it in five years, and it’s going to be a whole lot more.”
Novogratz is a big player in bitcoin, and a big character in most of the circles in which he’s moved — Princeton, wrestling, Goldman Sachs and Fortress Investments. Previously a more conventional — although maverick — hedge fund manager, he started Galaxy Digital in 2018 to try to raise crypto’s institutional bona fides, and of course to make money.
By the end of the third quarter, Galaxy Digital had $407.4 million in assets under management, and the firm’s digital trading platform processed $1.4 billion in trading volume. (For context, the total market cap of bitcoin is more than $350 billion).
Bitcoin’s current rally is a lot quieter than its last one. Google searches for “bitcoin” peaked in late 2017; they’re now running at about one-fifth of that level. But Novogratz said the evidence supporting bitcoin prices is better than it’s ever been. He said that it’s likely crypto will be volatile, but that bitcoin prices shouldn’t fall below $12,000 in this current cycle.
While the last bitcoin rally was driven mostly by individual investors, the big boys are playing this time, said Novogratz. “This rally is being driven by institutions slowly getting into the space, high net-worth individuals, hedge funds, real institutions. Bitcoin’s become a macro-asset.” Participation by those larger players — plus increased regulation — should smooth out, although not eliminate, some of bitcoin’s volatility.
It’s not just Wall Street players who are getting into crypto. HBO’s “Game of Thrones” actress Maisie Williams sparked comparisons to the frenzy of 2017 when she did a Twitter poll about whether she should buy. She ended up ignoring her followers’ collective response.
should i go long on bitcoin ?
— Maisie Williams (@Maisie_Williams) November 16, 2020
— Mike Novogratz (@novogratz) November 17, 2020
On crypto regulation, Novogratz said the current view of President-elect Joe Biden’s nominee for Treasury Secretary, Janet Yellen, is still to be determined. Former Federal Reserve Chair Yellen did say in 2018 she’s “not a fan,” and has been a public skeptic.
“Her approach to bitcoin as a financial asset for payments wasn’t that constructive, but a lot has changed.” Novogratz said, adding that her general dovishness should be good for hard assets like gold and bitcoin.
Novogratz’s enthusiasm for crypto extends to so-called altcoins, smaller currencies with much less liquidity and volume than bitcoin or ethereum, another more established cryptocurrency.
But he cautions they’re not for everyday investors. “You know, you can lose 60% of your money in a day. And so fair warning, if you’re going to play in those things, do it with small size and know what you’re doing,” he said.
Novogratz’s interest also extends well beyond crypto. He’s an investor in several ventures focused on therapeutic psychedelics. He also raised money to defeat President Donald Trump’s re-election.
“When I finished an ayuhuasca week, I thought about this carefully: every politician in the country — in the world — should have to do one week of ayuhuasca,” he said. “They will learn something about themselves.”
Julie Hyman is the co-anchor of Yahoo Finance Live, weekdays 9am-11am ET.