Michael Novogratz, a former macro hedge fund manager at Fortress Investment Group, trader and ranked a billionaire by Forbes in 2007 and 2008 took to the media stage on Monday (November 27) to say that Bitcoin could ‘easily’ reach $40,000 by the end of 2018.
In the age of cryptomania Michael Novogratz (nickname King of Cryptocurrency) is grabbing the media limelight with his hugely bullish forecast for Cryptocurrency, particularly Bitcoin. Novogratz made his claim that Bitcoin could ‘easily’ reach $40,000 by the end of 2018 on CNBC’s “Fast Money”.
Novogratz could not have appeared on a more appropriate show because this digital sexy gem is up an eye-watering 849.3% year to date (November 29). Bitcoin to date has been traders/investors fast money play of the year.
“Bitcoin could ‘easily’ reach $40,000 by the end of 2018”
But what about Ethereum (the other open source, public blockchain cryptocurrency)?
“Ethereum, which I think just touched $500 or is getting close, could be triple where it is as well,” said Novogratz.
So should investors go all in?
Despite Novogratz’s bullish forecast for the cryptocurrency, he is not recommending that investors should go all in. Retail investors should put no more than 1 to 3 percent of their net worth. For wealthier investors, Novogratz recommends putting about 5 to 10 percent of their net worth.
Novogratz has between 20 to 30 percent of his net worth is in cryptocurrencies which are split roughly in half between bitcoin and ethereum.
The total market capitalization of all digital coins on CoinMarketCap hit $304 billion Monday. Novogratz said he expects that could increase by about six times to $2 trillion at the end of next year.
“Ethereum, which I think just touched $500 or is getting close, could be triple where it is as well”
Demand from Asia has contributed to bitcoin’s gains. Japanese yen trading in bitcoin dominates trading volume at about 62 percent, according to CryptoCompare. U.S. dollar-bitcoin trading accounts for about 21 percent, and trading in South Korean won accounts for about 9 percent.
Note also that there appears to be an inverse correlation between the exchange value of the Chinese yuan and Bitcoin price. Could Chinese investors be scrambling into Bitcoin to protect their wealth from a plunging yuan?
“What’s different about these coins than other commodities … there is no supply response here,” Novogratz said. “So it’s a speculator’s dream in that as buying happens there’s no new supply response that comes up. So every price move gets exaggerated.
“It’s going to get exaggerated on the way up. There will be 50 percent corrections. It will get exaggerated on the way down” – Michael Novogratz
So Bitcoin is extremely volatile. For example, in mid-November the Bitcoin price plunge by more than 20 percent.Bitcoin has since more than recovered to an all-time high of $9,732.76 on Monday, according to CoinDesk.
Dan Loeb targets Sony. Dan Loeb is an activist investor and founder of Third Point, which oversees about $14.5 billion in assets.
Last year the activist investor viewed Campbell soup as a bargain when Third point reported that the soup maker could fetch a takeover value of $52 to $58 per share.
A year later and the activist investor Dan Loeb targets Sony
Dan Loeb's activist hedge fund Third Point is raising an investment vehicle to generate between $500 million and $1 billion so it can continue to buy Sony shares, according to a recent report in Reuters.