Mike Novogratz, the CEO of crypto investment firm Galaxy Digital, predicts that bitcoin will break out of its 2018 doldrums and soar to $20,000 in 2019 — fueled by a spike in institutional investments.
The former Goldman Sachs investment banker says institutional "FOMO" (fear of missing out) will drive the market up over the coming months as cryptocurrency assets gain more mainstream acceptance and traditional finance players take the leap into crypto.
Year-End Bitcoin Price Target: $8,800-$9,000
“Bitcoin has to take out $6,800, and after that we could end the year at $8,800 to 9,000,” Novogratz told Financial News.
“By the end of the first quarter [of 2019], we will take out $10,000. And after that, we will go back to new highs — to $20,000 or more.”
This past summer was a bloodbath for cryptocurrencies, which were hamstrung by a slump the market could not shake since the beginning of the year. It was a humbling anti-climax for bitcoin, whose prices rocketed to almost $20,000 in December 2017.
Despite the recent downswing, the industry scored major street cred after Harvard, Yale, and Stanford University announced that their multi-billion-dollar endowments had invested in crypto. MIT, the University of North Carolina, and Dartmouth also jumped on the bandwagon, as CCN has reported. The combined endowments of the six universities top a staggering $108 billion.
While the universities' allocation to crypto is reportedly small, analysts say the move will trigger a chain reaction among other big-name institutional investors, such as pension funds.
Because Wall Street and traditional finance giants tend to copy each other, Mike Novogratz and other experts say it's only a matter of time before the herd mentality takes over, opening the floodgates for other institutional investors to jump into crypto.
“There’s going to be a case of institutional FOMO [fear of missing out], just like there was in retail,” Novogratz predicted.
Regulation Will Legitimize and Boost Crypto
While the crypto ecosystem prides itself on being decentralized and -- according to some -- unregulated, Novogratz has repeatedly said the market will actually benefit from some formal regulation.
The former hedge fund manager says regulation will push prices up by legitimizing the industry and ridding it of scam artists.
As CCN reported, BlackRock — the world’s largest asset manager — has slowly started embracing crypto, but warned that it would not launch a bitcoin ETF until the industry becomes “legitimate,” said CEO Larry Fink.
BlackRock Won’t Launch Bitcoin ETF Until Crypto Is ‘Legitimate,’ Says CEO Larry Fink https://t.co/OD1awOqxkN
— CCN Markets (@CCNMarkets) November 1, 2018
“It will ultimately have to be backed by a government," Fink said. "I don’t sense that any government will allow that unless they have a sense of where that money’s going.”
Despite the recent bear market, Mike Novogratz believes the long-term outlook for crypto is off-the-charts.
Novogratz said an impetus for the upcoming rally is that major institutional players like Goldman Sachs and ICE (Intercontinental Exchange Inc.) — the owner of the New York Stock Exchange — have begun building financial frameworks to facilitate the adoption of crypto.
“It’s a bull market in institutions building the infrastructure needed for real-money investors to start investing in this space,” Novogratz told CNBC in September 2018 (video above). “Three to six months from now, there will be an ‘all-clear’ sign for people — big institutions and pension [funds] — to start investing.”
Featured Image from Bloomberg/YouTube