Legendary investor and Galaxy Digital founder Mike Novogratz has advocated that fellow investors increase their crypto asset portfolio share to 5%.
The comments came in an interview with CNN’s Julia Chatterley on December 8 in which she introduced Novogratz as a bridge between traditional macro investing and frontier investing in the crypto space.
When asked what bridges that divide between the two investment strategies, the Galaxy Digital CEO stated that Bitcoin has gone from a “frontier investment” to a macro part of investment portfolios with hedge funds, institutions, and corporates such as MicroStrategy paying attention.
“Everyone is looking at Bitcoin as a kind of digital gold and a hedge against the debasement of fiat currency.”
"You're going to see every single financial institution forced into this space."
Invest 5% of your net worth in #bitcoin says @novogratz.
"We're at the beginning innings of rebuilding the infrastructure that American & global business will be done on in the future." pic.twitter.com/b0hdiQwrrG
— Julia Chatterley (@jchatterleyCNN) December 8, 2020
Bitcoin: The Perfect Instrument
Chatterley posed the scenario of trillions of dollars of national debt trading at negative yields and sophisticated investors needing to diversify into things that have more room to rise.
Novogratz commented that Bitcoin adoption is accelerating against this backdrop of massive debt as it is the “perfect instrument” with a finite supply and minimal inflation. Major digitization of finances is another factor driving adoption, he added, noting that this is likely to happen on the Ethereum blockchain.
Commenting on the recent PayPal adoption of crypto assets, and even more recently, Spain’s second-largest bank – BBVA – offering crypto services, he added;
“You’re going to see every single financial institution forced into this space.”
Once central bank digital currencies (CBDCs) are rolled out, it will be on the same framework as decentralized cryptocurrencies, which will provide further on-ramps for wider adoption.
Crypto Portfolio Diversification
Commenting on other digital assets such as ETH and XRP, Novogratz was asked about diversification. He added that Bitcoin was a store of value, Ethereum has financial applications, and a small portion could go into venture projects such as those related to DeFi.
Chatterley finally asked how much one should invest and does the premise of losing it all still stand. Novogratz stated that he has changed his tune and increased a previous 1% net worth portfolio allocation recommendation to a more significant part of any investment portfolio.
“I think a new investor could put 5% into Bitcoin. Bitcoin’s not going back to zero […] It could certainly trade back to $14,000, you could lose 30-40%, but you’re not losing 80-90% of your money.”
He added that as a proportion of his net worth, which is estimated at around $700 million, his overall crypto exposure is around 50%.
Bitcoin is currently trading at $18,250.65, with a 24-hour volume of $30,487,017,363 and a market cap of $338,853,686,964.
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