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Mike Novogratz: ‘Crypto was created for this point' as banking crisis, de-dollarization escalate

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(Kitco News) - Bullish sentiment is on the rise among the crypto community as the ongoing banking crisis, the Fed’s inability to handle inflation, and the growing de-dollarization movement have many proponents declaring that crypto’s time has come.

Chief among those expressing a positive outlook is Mike Novogratz, the billionaire owner of Galaxy Digital, who says that the “market feels strong,” and crypto prices are likely to go up over the coming months.

Novogratz made the comments during Galaxy Digital’s Q4 2022 earnings call on Tuesday, at one point considering calling his remarks “the tale of two cities, because it feels like overseas crypto is really doing really wonderfully and domestically there seems to be a regulatory onslaught.”

Instead, he settled on calling his pitch, “the good, the bad and the ugly.”

“Let’s start with the good… This is crypto’s moment,” he said. “Crypto was, in lots of ways, created for this point, right? Satoshi Nakamoto way back in 2009 worried about the breakdown of the legacy financial system. He worried about populism infecting our politics and a constant printing of fiat currencies and a debasement of money, and created Bitcoin.”

Novogratz went on to liken the money printing that has occurred since 2008 to a “debt orgy” that has led to a build-up in debt to GDP that “might be unsustainable.”

While the global banking system has begun to falter, Bitcoin and Ethereum have been the two best-performing assets in the last three years, he noted, adding, “so whatever Jamie Dimon wants to say, whatever the Biden administration wants to say, they’re just wrong and the world knows that.”

The “bad,” in Novogratz's view, largely revolves around the regulatory regime in the U.S., which he said “is very tough.”

“It was making lots of progress until FTX, and then Democrats felt foolish that they were so close to Sam Bankman-Fried, from the SEC to the CFTC to the Biden administration, and have used this one example of horrific fraud and being snookered by a guy in Bermuda shorts to just say the whole thing is bad,” he said.

After firing off a list of recent actions, such as weekly Wells notices from the SEC, Novogratz suggested that the result will be a backlog in judicial proceedings, which he said is not good for innovation and is pushing crypto companies offshore.

Despite these concerns, “crypto prices are higher, activity is moving up, and we see a pretty promising future,” he said.

As far as the “ugly” goes, Novogratz pointed to Galaxy Digital’s stock price, which is lower despite Bitcoin price climbing higher and improved fundamentals at the company.

Moving forward, the Galaxy Digital CEO has hope for the crypto market as a whole once the current crackdown subsidies. “I’m surprised to hear myself say this given where my mindset was in late December, but it would not surprise me if we were substantially higher three months, six months, nine months from now.”

He also suggested the heavy-handed approach from the SEC and CFTC in recent months is the result of embarrassment as both agencies were close with former FTX CEO Sam Bankman-Fried. “In a lot of ways, the whole group got egg on their face all through this one guy, and it just allowed this vacuum, and I don’t think that lasts forever.”

In closing, Novogratz indicated that macro hedge funds around the world are paying attention to the recent developments, which has led them to have a favorable opinion of both gold and Bitcoin. “This war between China and the U.S. with Russia as a proxy is going to push the gold narrative, and the digital version of that is Bitcoin, and so I think from a macro investor perspective, it’s very clear.”

“Rich Dad, Poor Dad” author Robert Kiyosaki agrees with Novogratz that now is a good time to go shopping for assets that will maintain their purchasing power amid rampant inflation, including gold, silver, BTC and designer items.

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