Michael Novogratz, the CEO of Galaxy Digital, believes the digital assets market will be volatile and difficult for the next few quarters. He highlighted that that stock market correlation will weigh down the crypto market for some time.
Novogratz, during the Galaxy Digital earnings call, pointed out that crypto trades “correlate” to the Nasdaq until the market hits a new equilibrium. He feels some damage will be done. Trading will be very choppy, volatile, and difficult for at least the next few quarters before traders get some sense that they are at an equilibrium.
Moreover, analysts at Bank of America in a recent report called Bitcoin a risk asset. They questioned its status as an inflation hedge given its high correlation with the stock market. The Nasdaq was down amid a weak broad market, while the Bitcoin experienced a 10% fall on May 9. The popular cryptocurrency slumped below the $31,000 level with the overall crypto market losing almost half a trillion in cumulative market cap.
Novogratz had also predicted that BTC would hold the $30,000 line if Nasdaq Composite held over the 11,000 level. But in another interview, he had said there wouldn’t be more pain. The executive said Nasdaq might touch the final destination of $10,000 prompting Bitcoin to slide under the crucial level of $30,000. His comments come when Galaxy Digital Holdings Ltd recorded a comprehensive loss of $111.7 million, compared to a $858.2 million gain in the first quarter of 2021.
The company attributed the low figures to unrealized losses on digital assets and on investments in Trading and Principal Investment businesses. It was partially offset by profitability in Galaxy Digital’s Investment Banking and Mining businesses and lower operating expenses. Furthermore, Galaxy Digital Asset Management reported assets under management (AUM) of $2.7 billion as of March 31, 2022. This is a 5% quarter-on-quarter fall.
