Former Fortress Investment Group hedge fund manager Michael Novogratz was on Bloomberg Technology last week talking about the recent bitcoin price movement and its volatility. He believes the rally is real and price of bitcoin can reach the previous high of $20,000 perhaps by the fourth quarter of 2019. The price of bitcoin reached just shy of $14,000 a couple weeks back, and he believes the next time it reaches that level, there would be no looking back.
The catalyst for the next bitcoin rally will come from more institutional investors getting in on the action, such as local pension funds from states like Wisconsin and Texas. If and when those institutional investors do get involved, Novogratz expects the bitcoin price to break the all time high from 2017.
Check out clip from Bloomberg Technology below, we’re also including the transcript in case you can’t see the video. All rights belong to Bloomberg and please refer all credits to Bloomberg.
first to kick things off. Give me your take on the recent price action that we’ve been seen a lot of volatility. What do you make of it?
Well if we had a spectacular rally right where you were around four thousand dollars for Bitcoin. Say, two months ago we traded up as high as thirteen eight. And so the last three thousand dollars, that was really a parabolic move where everyone got it kind of got excited and they got excited for real reasons. They got excited because of Facebook. They got excited because of uber and MasterCard and Visa all saying, Hey, we want to participate in the Cryptocurrency world. And so all of a sudden, this went from guys like you are Beanie saying, Hey, this is all you know, tulips.
The biggest companies in the world say we’re gonna participate on top of Yale and Harvard and standards and down with participating. And so all of a sudden, the question about Institutionalisation has been answered, and now it’s a question of taking, you know, the time to build out the systems. And so people are rushing in the rushing into front run institutional accounts and things got a little carried away and now in a consolidation. So we,
went up to fourteen thousand back down to ten thousand, I think ten. Eight right now. And I think we’re gonna see the market consolidate between ten thousand and fourteen thousand for a while before it takes off the next leg higher in the next. Like higher probably comes with the new with, institutions the state of that, state of Wisconsin in the Texas medicine teachers,
until those guys start coming in and then you’ll see Bitcoin, you know, go towards the old highs twenty thousand and higher.
Well, when you say parabolic move our ears perk up, talk to me about when you sold, which was arguably, in hindsight, a very smart decision. You said that you wish you had sold more. What is your next price at which you’d be another seller?
You know, Listen, it’s,
coming out of context, you know, by the time I,
was on TV, the market has fallen twenty percent. Of course I’d wish I sold more.
I didn’t think we had gun parable like there was too much energy in the market. And I think we’re gonna consolidate and you know, we’re buyers. I’m a buyer below. I trade a portion of my corporate queen position all the time.
I don’t think I’m selling the next time up to fourteen thousand. I think you know, the next time we get up there the second time we get up there, you know, it’s probably closer to twenty thousand. And so I don’t expect that in the next few weeks. Quite frankly, I probably don’t expect it towards the middle Middle to the end of the fourth quarter on. I think we’re gonna see this, I say a kind of a period of consolidation.
Uh, but what? What? What’s interesting is, you know, you know, Nouriel lost the debate. I I was I was with him and in Las Vegas and in bed in one of the six thousand.
year from meant it to be higher.
He lost the debate because all the big incision Microsoft is building their identity solution on the block chain. These big companies,
right? So talk to me more about critics like Dr Nouriel Roubini, who came out at the Blockchain summit and and said that he doesn’t believe in it because there’s massive amounts of price manipulation. How do you respond to that?
You know, it’s a new technology. There’s a lot of hype around, so there have been placed. There has been a price manipulation. It’s being weeded out, right? You’re getting.
exchanges that are being regulated. You’re getting real players in the game. You’re getting warm or pipe,
ways for people to participate, right? TD Ameritrade. Pretty soon you will abide that coin under TD Ameritrade account. That’s a big, big deal, right, because the general population hasn’t signed up and not a quaint a squall it yet or a circle wallet yet on. So we’re going to see over the next three months, six months, twelve months, eighteen months is more and more ways you can buy this stuff.
I would bet you within two years MasterCard and Visa accept.
Bitcoin with their credit cards.
Visa has fifty million merchants worldwide. The fact that they’re part of this, you know, Li bra, The Facebook coin called Labour Consortium, is a huge statement.
So talk to me about Facebook’s entry into the crypto market doesn’t give Bitcoin and other cryptocurrencies legitimacy.
Yeah, completely. Does it completely legitimises this whole idea of crypto currency and it doesn’t really compete against Bitcoin Direct. Facebook is working on creating a stable. What I’ll call a stable this coin something years for payment.
Currencies need to be relatively stable, but the otherwise Why would I spend?
Why would I spend a currency? But I thought I was going with a whole lot more in three months. And so you need lower volatility to be a payment currency.
Bitcoin, I think, actually is legitimised by being a real hard asset,
you know, it’s got a six supply. It’s very difficult to change the rules around Bitcoin. So it becomes like a digital gold and people don’t own enough of it yet. So I really see the prices going. Ah, lot significantly high over the next couple of years and everyone buys just a little bit of Bitcoin.
What is there? You say the price would go higher over the next couple of years. Do you have a call?
You know, like I said, I think if we can get to the old high by the end of this year, every Bitcoin er we’re pretty happy. But once you take out twenty thousand and it opens up forty thousand next and much fight over time. When I think about Bitcoin, it’s probably got about one hundred sixty billion dollar market cap right now, one hundred fifty billion dollar market cap Gold’s gotta make you have truly another market cap. And so between has a long way to go before it replaces gold and have very similar features. Right? Gold’s got a limited supply, even take all the gold that’s ever been mine in the history of the world.
and Dylan and three Olympic sized swimming pools. And so that’s kind of a crazy statistic, right? We could build a cube of gold in Central Park. It would be worth eight and a half trillion dollars. Hard to get your mind around right, and we don’t use gold for much jewellery. Some, most of us, it’s involved.
So big coins. Think about it. It’s a digital gold.
Who do you see as the next big companies entering the market? We’ve talked about Facebook, MasterCard, PayPal, who were some of the other big companies that you see really starting to make an investment.
You know, I think you’re going to see in time the investment banks need toe move into the space and you know work. We’re trying at galaxy to carve out our necks before they all show up. But at one point, you know, the before exchange deaths were going to trade dollar yen and the euro and the great British pound and liberal coin and Bitcoin and a theory. Um uh, they’re gonna just be parts of the financial infrastructure of the of the world. And so I do think the innocent banks are probably gonna end up moving into the space around later.
You mentioned Ethereum. Talk to me about the divergence in price action that we’ve seen of Bitcoin, which is having a really big move year to date. Some of the other cryptocurrencies like a theory, um, and Ripple not so much. What’s your take on? The divergence of the price? Action,
has carved out a really interesting lane, which is digital gold, and it doesn’t need to change fulfil its mission.
But when it is today is perfect to be digital gold. Right? And so in gold got a big market cap.
Ethereum is fighting to be what I’ll call Webb three point Oh, this.
centralised supercomputer that will process tonnes of transactions.
It’s a really ambitious project, and it’s not finished yet. There’s a lot of technical,
work that needs to be done for it to scale, properly, incorrect, to be usable, you know, on a wide, wider range of things in a very fast what, and it’s also competing against lots of other projects. And so the market got more rational. They say. Okay, we still like Syria Mma lot. We like,
lots of its competitors, if it’s Eos for things like Infinity and Al Karan that just launched and.
telegram is coming up soon. But they’re all fighting for a different a different piece of the pie and the queen is. And I think while it’s a big, big pie over the long haul, we’re two to three years away from really seeing traction of real growth in that in that lane.
Finally, my Cryptocurrency regulation. Do we need more of it?
You know we need smarter regulation.
I think there’s a wake up call waiting regulars who they talked. They talked institutional people, and all of a sudden,
like Visa and MasterCard, because what you’re talking about this is important, and regulators are going to take a much different look than they did two years ago.
I think around the world Facebook sock regulators.
There will be a market for money and not get lots of central bankers. Nervous.
So I think we need smarter regulation. I think the US is getting falling behind. They know they’re falling behind.
Europe, quite frankly, is ahead of the U. S. And their places like Singapore and Bermuda.
You know, Boom, You just got this amazing insurance industry down there there now setting up the rules and regulations for a crypto in digital industry.
where you’ll see a lot of companies based themselves out of Bermuda. And so I think it’s time for the U. S.
To pick up the pace a little bit. My own sense is we’re not going to see big changes at the S E C until Carney moves on and we get our next head of the S E C.
That’s just that’s a gut sense, but I’m hoping it happens faster