For the second time in less than three weeks, Mike Novogratz, CEO of digital asset manager Galaxy Digital, has spoken on the ongoing cryptocurrency crash. On May 21, Novogratz warned against trying to predict a bottom to the crypto crash.
Crypto Hedge Funds Will Fail
In a latest, Novogratz said two-thirds of the hedge funds that invest in cryptocurrencies will fail in the current market downtown. According to Bloomberg, the CEO made the comments at the Piper Sandler Global Exchanges and Brokerage Conference.
“Volume will go down, hedge funds will have to restructure. There are literally 1,900 crypto hedge funds. My guess is two thirds will go out of business.”
Novogratz faced criticism for his role in the recent collapse of the Terra blockchain. At the time, Galaxy lost $111.7 million in the first quarter of the year 2022. The loss was largely due to the fluctuation in the cryptocurrency industry.
Removal Of Stimulus Had An Impact
The Galaxy CEO cited the market’s reaction to Fed’s removal of stimulus as a reason for the recent collapse in token prices. He added that the token’s collapse dented confidence in the cryptocurrency and decentralized finance space.
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After the Terra crash panned out last month, Novogratz said trying to pick a bottom was extremely high-risk. He predicted at that time that the market could possibly crash further.
Also, Galaxy Digital had invested in Terraform Labs during the last quarter of 2020. He has since then been promoting the UST stablecoin aggressively. Interestingly, Mike Novogratz even got a Terra LUNA tattoo on his hand.
However, following the Terra fallout, he said the tattoo would be a constant reminder that venture investing requires humility. He suggested that individual crypto investors should have proper risk management in place. Investors’ crypto allocation should only be 1% to 5% of their entire asset portfolio, he added.
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