Key facts
- Michael (Mike) Novogratz is one of the most prominent investors in cryptoassets. He is the founder and head of Galaxy Digital.
- Novogratz was among the first Wall Street figures to publicly acknowledge digital currencies as a promising and valuable asset class.
- In 2008 Forbes listed Novogratz as a billionaire.
How did Novogratz enter crypto?
Michael Novogratz was born in 1964 in Alexandria, Virginia (USA), into a large family. He earned a Bachelor of Arts in economics and served in the National Guard.
Novogratz built a Wall Street career. He worked in Goldman Sachs’s Tokyo and Hong Kong offices, later became a partner and ran the Latin America businesses. In 2002 he moved to the investment firm Fortress Investments, where he helped organise its IPO. The company suffered heavy losses during the 2007–2008 recession.
In 2015 Novogratz joined a relatively small cryptocurrency investment firm called Galaxy Investment Partners. As early as 2017 he said he kept about 20% of his personal capital in bitcoin and ether.
When did Novogratz found Galaxy Digital?
In 2018 Novogratz founded his own company, Galaxy Digital. Its initial investment fund totalled $500m, of which Novogratz contributed $150m. He has repeatedly called the company “the Goldman Sachs for cryptocurrencies”. Shortly after launch, Galaxy Digital listed on Canada’s TSX Venture Exchange.
Today Galaxy Digital describes itself on its website as a bridge between the crypto industry and institutional investors, offering a wide range of services for “whales”, including bitcoin mining.
The company is also one of the leading institutional investors active in the crypto market. As of September 2021 its portfolio included more than 150 digital-asset projects.
In 2021 the company struck strategic partnerships with Morgan Stanley and Invesco, and at the end of the year it raised $500m through a bond offering.
By May 2022 Galaxy Digital had around $2bn in assets under management, roughly half in cryptoassets and the rest in shares of crypto-related companies.
What do Novogratz and his company invest in?
In one interview the venture investor said he first bought bitcoin in 2012 at $95, and in 2013 he took part in Ethereum’s token sale, buying coins at $0.99.
One of Galaxy Digital’s first large investments was the US crypto-backed lender BlockFi in 2018. A few months later it joined a funding round for mining firm Bitfury Group.
In September 2020 Galaxy Digital became a shareholder in ParaFi Capital, a fund investing in decentralised-finance projects. Thanks to this partnership the company allocated about 5% of its capital to DeFi.
In May 2021 the company announced the acquisition of leading US crypto custodian BitGo for more than $1.2bn. However, as of May 2022 the deal had not been completed.
Also worth noting is a joint project with Bloomberg—the Bloomberg Galaxy Crypto Index (BGCI), used by the platform’s corporate clients. It tracks the market-cap dynamics of bitcoin and the largest altcoins.
In addition, Galaxy Digital has a dedicated gaming investment arm called Galaxy Interactive, with a budget of several hundred million dollars.
What does Novogratz think about bitcoin?
The Galaxy Digital founder extols bitcoin, calling it the only reliable cryptoasset, especially for newcomers and for residents of countries with weak national currencies. Overall, in his view, BTC should account for no less than 2–3% of the portfolio of anyone seeking to preserve their savings.
At the same time, he said in autumn 2021 that 75% of today’s altcoins will not survive the next ten years.
Novogratz urges investors to look past bitcoin’s volatility, arguing that in the long run the price of the first cryptocurrency will rise by an order of magnitude. He has also noted that market swings diminish as more “whales” enter.
Another key factor in determining bitcoin’s price, in his view, is the US Federal Reserve’s abandonment of monetary tightening. As he said in April 2022, once the Fed stops raising rates, bitcoin will settle somewhere between $500,000 and $1m.
He is convinced that bitcoin will ultimately be used to preserve capital rather than for payments. Analysts at Galaxy Digital forecast that both BTC and ETH would double in price by mid‑2023.
Did Novogratz invest in Terra?
Yes. Galaxy Digital invested a large sum in Terra’s developer, Terraform Labs, taking part in at least two funding rounds in 2021.
Mike Novogratz even got a tattoo in early 2022 dedicated to the project, and counted himself among the “Lunatics” (as Terra’s community called itself).
A few months later, the project’s native coin and its algorithmic stablecoin UST collapsed. In a letter to Galaxy Digital employees, Novogratz admitted that investing in Terraform Labs had been a mistake. The tattoo, he said, “will be a constant reminder that venture investing requires humility”.
What does Novogratz think about CBDCs?
Since August 2020 US authorities have been working on a digital dollar project. Mike Novogratz is among the supporters of a new kind of state-issued currency.
In his words, the digital dollar should be issued as soon as possible, and China, which recently expanded testing of the digital yuan, proves the project’s urgency. America’s slowness on this, for Novogratz, is an “existential crisis”.
The investor has also accused US authorities of “not understanding cryptocurrency” and has opposed tightening the regulation of digital assets.
“Cryptocurrencies are the future of our financial system, and citizens deserve officials who do their homework to understand this new technology. We also need regulators and politicians who realize that new ideas need space to grow,” he wrote.
What does Novogratz think about NFTs?
In 2020, together with businessman and author Gary Vaynerchuk and the head of internet retailer Fanatics, Novogratz announced a sports NFT marketplace called Candy Digital.
The first digital item offered on the platform was an NFT of American baseball player Lou Gehrig’s farewell speech. In October 2021 the startup was valued at $1.5bn.
Novogratz calls the non-fungible token market “the road to the future”. Everyone will soon use it, the Galaxy Digital head is certain—it is “only a matter of time”.