Novogratz: 'More Damage to Be Done' After Crypto Rout
This is the first time it goes this low since back in july 2021, putting its decline from a november record high to more than 50 percent. Our crypto contributor, shanae basic, is here with more brutal selling pressure. Brooding brutal, brutal, solid impressions, and you take a look over here. Caroline weve, been talking about this one year. Merry go round that crypto investors have really gone through and bitcoin being the brunt of that. The biggest cryptocurrency here and you look at where weve gone more than 10 lower over the last couple of days now getting a little bit of lift above 31 000 again, you and i have talked to mike novogratz a little bit earlier today with a real worry That they could fall below 30 000 if the nasdaq also continued to decline. That is the low that he expects, listen, but its not just bitcoin that we want to talk about, although that there is a lot of momentum in that downward pressure. There you see over the last couple of days lets talk about other cryptocurrencies, even stable coins, a lot of worry that you see over there with ust being unpacked to the dollar. I want to pull up this tweet from investor jim bianco of bianco research and the worry that ust down more than four percent and under 96 cents at one point. The worry that a downward move in a stable coin, like that can crash by bitcoin, backed by bitcoin, exactly the most important part there is.
Is there any more selling that needs to be done to peg that stable coin to the dollar, so theres? A lot of worries here about how one asset will correlate to another asset and lets take a listen here. What mike novogratz had to say about the selling pressure? We were 40 000 liberty just a week ago, and so the pace of this move has been severe right, its correlated with the risk off that youre, seeing in all assets right the rise of the dollar um, and so i still think 30 000 should hold right. Well see if 12 000 holds the nasdaq and we bounce uh in the next few days. Uh then i think youll see bitcoin 30 30 000 will hold if the nasdaq falls and we head towards 11 000. You know theres a shot that 30 000 goes. I would tell you getting away from price, which is hard to do in a day when the markets down 10 um its really interesting. If you just look back at all the adoption, thats happened this year, i mean the first quarter alone. Venture funds have put 14 billion dollars into the ecosystem, and so this is a an asset class right, blockchain digital assets, bitcoin that is getting tremendous investment, tremendous interest, and so, while the short term, you know outlook is painful its its going to be, like, i said, Volatile with the rest of assets as the fed adjusts from free money to normalized conditions, um, my medium term conviction hasnt wavered.
I really do still see this as a very exciting asset class, with a lot of momentum and mike in for correlation, because i think that was the main hope. The prayer, the saying that was going to these institutional investors that have come into crypto is that this is a non correlated asset, but thus far its very correlated in large part, probably because more institutional players have come in and theyre having to sell as they see The nasdaq go down, listen, it had less correlation until there was free money forever right. The correlation increased dramatically after covid, because every central bank took a fire hose of liquidity and sprayed it on the tarmac, and so it made all assets. You could look at the correlation of you, know fine wines or baseball cards or any collectible uh to the nasdaq to assets, and so were unwinding. This era of free money, and so its not surprising to me that bitcoin, which was ahead, gets free money, is selling off uh. I do think those correlations will break down or will lessen the moment. We find some stability in the market, but right now, if youre, a investor youve got 100 fires to put out, did you over commit to venture? Do you have enough liquidity to pay your private equity commitments? Oh, my goodness, i used to be in risk parity that doesnt seem to be working at all anymore, and so very few people want to put on new risk in a moment of this kind of tumult, and so i think once the tumult stops, i think thats A word to mold once the chaos stops, then i think youre going to see the allocators who have been doing all their homework.
Listen, i just went around the country to a bunch of conferences. Is i am wildly convicted that there is infrastructure being put in place to bring lots of capital into this space yeah so again its its its surviving this this unwind that investors have to to to manage. When you talk about the unmind, though mike you seem to be talking about a lot of people that maybe just saw the opportunity here, these werent sort of the early adopters, these werent necessarily uh the crypto, faithful. If you will, at least not in the traditional sense here for those crypto faithful out there here, do they look at this type of market and think you add to positions you buy into this dip? Or do you just kind of stay the course and wait for whatever shakeout is happening to end? Listen for the guys who have been in crypto a long time longer than me. This is par for the course um for most people who manage institutional money or manage lots of money. This is unbelievably painful, and so you use the same kind of risk analysis you do when youre trading other assets right. I would tell you, though, that the new institutional players that are coming in are coming in with a very long term focus i mean, and you can put black rock and black stone and citadel and apollo into that bucket right. Those are four of the biggest names in investing and that theyre getting it right.
Theyre theyre working on infrastructure and trying to help create institutional frameworks to bring their clients in, and so i dont think this asset class is going away because weve had a fifty percent sell off. Oh your clients, your analysts today have been asking you about the recession. Probabilities and how you prepare for that? How do you prepare for that? So i think we are going to go into a recession in some ways that will be good for crypto, because it will finally get interest rates, calm and and down again, like im sure well have crypto adoption both from investors. Uh were already seeing it with companies right so, but asset classes always get prices always get ahead of where the actual you know, building of a company is right: tesla, wasnt, even issu, you know selling cars and they had a decent market cap, and so you got To got to keep the story up until you can build product that then generates the revenue thats. The process thats happening in crypto, and so what crypto needs is stability in the non crypto markets. At that point, youll see stability in crypto and youll, see fast adoption and caroline. That was of course, galaxy digitals mike novogratz galaxy digital microstrategy. Both of these companies dropped more than 25 today in the market. So you see that crypto decline actually exacerbated a lot more.