Galaxy Digital Going Strong on BitGo Acquisition

·3 min read

Cryptocurrency, a product of blockchain technology, is proving to be one of the most hyped topics of discussion of the generation. Some believe it to be the “Internet of Money” and think it has the potential to change the way money works forever. Although we are still in the early stages of blockchain, the vision of having a cryptocurrency-dominated economy may not be as far away as we think. At least, we seem to be on track to have several investment opportunities soon.

The past few years were all about companies slowly but surely testing the waters. As a growing number of companies start to buckle down on cryptocurrency, Galaxy Digital (TSE:GLXY) is gaining popularity on its growth story. Currently, the company is evolving from a firm dealing solely in proprietary digital asset investments, to a diversified cryptocurrency-focused financial services firm complete with a prime brokerage platform. (See Galaxy Digital stock charts on TipRanks)

Following a virtual fireside discussion with founder and CEO Mike Novogratz, hosted by BTIG last week, BTIG analyst Mark Palmer put together key takeaways from the discussion.

The impending $1.2 billion acquisition of private cryptocurrency custodian BitGo, in the fourth quarter of 2021, is expected to expand Galaxy Digital’s offerings. Novogratz claims to have been motivated to add world-class crypto custody to its mix of offerings after learning that institutional clients prefer to keep custodianship of their digital assets with the same trading partner.

Novogratz expects the conclusion of the acquisition to immediately propel Galaxy Digital to the top rung of the crypto custody space. He also expects the deal to position the company as a leader in the emergence of on-chain asset management. The reason behind this expectation is that BitGo currently holds more than $40 billion worth of digital assets under custody, and boasts of over 400 institutional clients. Moreover, BitGo has a compelling staking-as-a-service platform, which is likely to be a key growth driver for Galaxy Digital, as it will enable cryptocurrency investors to stake their proof-of-stake via a third-party service that will handle the technicalities of the staking process.

Galaxy Digital’s focus on derivatives and options sets the company’s crypto-trading operation apart from its peers. Palmer believes Galaxy Digital’s efforts will boost institutional adoption of digital assets, as cryptocurrency slowly becomes accepted as a hedge against inflation.

He added, “The company’s pending acquisition of cryptocurrency-custody specialist BitGo announced last month would provide it with a key piece of infrastructure needed for it to become a potent, one-stop shop for institutional investors in the digital asset space.”

Following this discussion, Palmer reiterated a Buy rating on Galaxy Digital with a price target of C$31 ($24.81), implying a 56.5% upside potential to current levels.

Consensus among analysts for Galaxy Digital’s prospects is a Moderate Buy based on 2 Buys and 1 Hold. The average Galaxy Digital price target of C$32 implies 61.6% upside potential to current levels over the next 12 months.

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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