In an act of sacrilegious blasphemy (I’m kidding), Michael Novogratz cashed out a portion of his Bitcoin (BTC) holdings last week.
As reported by DemandSolutionNews, the chief executive of crypto merchant bank Galaxy Digital did so at $13,000, prior to the $4,000 fall seen in the following days. At the time, he cited concerns that the market was getting too frothy, even quipping that Bitcoin had then gone parabolic.
Now, the former Wall Street hedge fund manager has entered his redemption arc, so to speak. In a recent televised interview with Bloomberg, Novogratz, who famously put upwards of 20% of his wealth into cryptocurrencies, namely BTC and ETH, gave a number of reasons why he believes it would be unwise to sell at $13,000 again, and why Bitcoin could soon see new highs.
What’s Next for Bitcoin?
Starting off his segment, Novogratz tried to reassure investors that the collapse from $13,800 is over. In fact, he explains that more likely than not, Bitcoin is poised to consolidate from here, implying a trading range of $10,000 to $14,000 — the psychological price point and key technical level (0.618 Fibonacci Retracement/2018 resistance), respectively.
So, what comes after said period of consolidation? Per Novogratz, fresh all-time highs for the leading cryptocurrency, meaning a move past $20,000, will come in the coming years as institutions continue to foray in the space:
“I’m not selling the next time we hit $14,000. The second time we reach that level, [there may be] a move to $20,000. I don’t expect this to happen in the next few weeks: I don’t expect it to the middle or the end of the fourth quarter. But the next wave will come when the institutions — the state of X, Texas Teachers Union, and those guys — come in, and then you will see Bitcoin hit $20,000 and higher.”
Novogratz seems to be playing it safe with this comment, not giving a clear date or even timeline for the $20,000 target. Regardless, the news cycle suggests that institutions are already well on their way into the industry.
Institutions Well on Their Way
Notably, the crypto industry has seen massive corporate names join hands with Facebook for Libra. These include but aren’t limited to PayPal, a16z, Coinbase, Booking Holdings, Visa, Mastercard, Spotify, Uber, and Xapo. Simultaneously, upstart cryptocurrency exchanges backed by Wall Street giants, namely ErisX, LedgerX, and the New York Stock Exchange’s Bakkt, have secured the proper licenses from American financial regulators to soon list Bitcoin-backed vehicles.
Also, TD Ameritrade and supposedly E*Trade, two leading brokers in the U.S., are soon expected to launch spot cryptocurrency trading, which many say will give retail and institutional investors alike a regulated, trusted way to siphon money into Bitcoin. As Novogratz explained:
“You can buy bitcoin on your TD Ameritrade trading account. That’s a big deal because the general population has not signed up and got a Coinbase or Circle wallet yet. We are going to see in the next three to eighteen months more ways to buy bitcoin.”
And Microsoft revealed that it would be directly using the Bitcoin blockchain to build a decentralized identity management system, which many say is a massive validation of Bitcoin’s technology, not just its viability as an investment vehicle.
But most importantly, Bitcoin futures volume on the CME — institutions’ go-to cryptocurrency market at the moment — has continued to grow month-over-month. The exchange’s latest report on Bitcoin revealed that the month of June was a record month for the CME’s crypto market, in that it saw client sign-ups surge by 30% and open interest (capital in contracts) hit new highs.
All these aforementioned data points and news stories would suggest that institutions are foraying into the cryptocurrency market as we speak. But, whether or not this translates into positive price action isn’t clear just yet.