Billionaire bitcoin bull Michael Novogratz, founder and CEO of Galaxy Digital Capital Management, says every investor should have 1% to 2% of their portfolio in cryptocurrency. Not to do so, he told CNN, is “almost irresponsible.”
On Wednesday, Novogratz’s firm and Bloomberg launched the Bloomberg Galaxy Crypto Index, an index that tracks 10 cryptocurrencies, including bitcoin and Ethereum.
Investing in cryptocurrency is important not on account of expected gains, Novogratz said, but because in two to four years blockchain technology, which allows companies to make and record near instant transactions, will be challenging every vertical.
While the decentralized version of Uber may not be Uber, it will be a challenge and it constitutes a “real value proposition,” he said.
Novogratz, a former hedge fund manager at Fortress Investment Group and Goldman Sachs partner, said he has invested 10% of his net worth in cryptocurrencies.
Mainstream financial institutions, meanwhile, are finding ways to allow traditional investors to benefit from bitcoin. Nasdaq in April signed an agreement with Gemini Trust, a cryptocurrency exchange.
One unknown, however, is how governments will regulate cryptocurrency.
Novogratz predicted the New York Stock Exchange will be active in cryptocurrency trading in less than six months.
Not everyone on Wall Street agrees with Novogratz. Warren Buffett, an investment icon, has been bearish on bitcoin, having most recently called bitcoin “probably rat poison squared” at Berkshire Hathaway ’s annual shareholder meeting on Saturday.
Novogratz said the difference in opinion is age-related, with older players much more skeptical about cryptocurrency.
Galaxy Digital, meanwhile, has announced plans to buy Canadian startup First Coin Capital and then merge with Bradmer Pharmaceuticals — which is publicly listed on the Toronto-based TSX Venture Exchange (TSX-V) — through a reverse takeover.
Following the merger, Bradmer will be renamed to Galaxy Digital, allowing the company to trade publicly without having to undergo traditional financial disclosures associated with listing on an exchange.
Galaxy Digital’s cryptocurrency merchant bank — which Novogratz reportedly hopes to make the “Goldman Sachs of Crypto” — will have a fourfold business model, according to public statements made by the firm.
The bank will open a cryptocurrency trading desk and initially seek to capitalize on opportunities for cross-exchange arbitrage. It will also invest in blockchain startups and ICOs, much as Novogratz intended to do through his now-shelved cryptocurrency hedge fund. Finally, it will provide advisory and asset management services to wealthy clients.
Featured image from Flickr/Hudson River Park