Mike Novogratz’s crypto optimism remains unabated and it is no surprise. The former Goldman Sachs short-term bond salesman scooped up (while he was holidaying) $250 million in profit from trading in cryptocurrency during the course of the year (2016-2017) at the peak of the crypto mania.

Mike Novogratz’s crypto optimism was recently reinforced when the crypto billionaire and Founder of Galaxy Digital Capital Management said in a CNN interview May 9 that it would be “almost irresponsible to not invest in Bitcoin”.

But Bitcoin (what Mike Novogratz refers to as “digital gold”) has lost a significant 38.89% against the USD whereas real gold has depreciated 0.29% during the same period.

“’Almost irresponsible to not invest in Bitcoin”

MIKE NOVOGRATZ

So is Mike Novogratz’s crypto optimism over the top, bearing in mind that Bitcoin has crashed year to date against the USD and other assets?

Mike Novogratz touts Bitcoin as “digital gold” but when you go beyond the sale spin and take a sober look at the numbers you’ll see otherwise. Perhaps it is high time to re-examine Mike Novogratz’s crypto optimism. Let me spell it out, investors who jumped on the crypto mania bandwagon late have seen their wealth destroyed. To date, cryptos have not proven themselves to be a store of value over time.

What could be supporting Mike Novogratz’s crypto optimism is the potential functionality of digital currency technology.

Think of how transport has evolved over the last few hundred years, the horse, the horse and carriage followed by the steam engine, trains and then the combustion engine which led to mass private transport.

So the medium by which we transact is also continuously evolving from barter to notes and coins backed by precious metals, fiat currencies, digital transactions using debit/credit cards that keep an account in a fiat currency and then cryptos.

An online transaction is a digital portal to portal handshake. Cryptos facilitate an increasingly globalized world, a global platform which spans across sovereign borders bypasses national currencies and unites buyers and sellers, irrespective of geographical location or proximity to market in cyberspace. Cryptos have the potential of being the world’s first currency in a global village.

“Cryptos have the potential of being the world’s first currency in a global village”

 

So Mike Novogratz’s crypto optimism could be based on the potential future functionality of cryptos as decentralized digital currency that is based not on the trust of a central bank’s monetary policy but the algorithm of a computer.

The crux of Mike Novogratz’s crypto optimism is on his believes “that crypto’s big impacts will happen at the street-level, where regular people do things like rent rooms, ride cars and pay each other to do work”. Novogratz adds, “The decentralized revolution is going to have its biggest impact in the retail sense but to get there it will take the investment power of the big institutions”.

But there is a further reason for Mike Novogratz’s crypto optimism. Novogratz derives value from the burgeoning impact of cryptocurrencies’ underlying blockchain applications:
“…these technologies in two to four years are going to give every vertical a challenge.”
Indeed, Mike Novogratz’s crypto optimism has not only led to comments like “It’s almost essential for every investor to have at least 1% to 2% of their portfolio”.

“The decentralized revolution is going to have its biggest impact in the retail sense but to get there it will take the investment power of the big institutions” – Mike Novogratz

But there is a further reason for Mike Novogratz’s crypto optimism.
Novogratz derives value from the burgeoning impact of cryptocurrencies’ underlying blockchain applications:
“…these technologies in two to four years are going to give every vertical a challenge.”

Indeed, Mike Novogratz’s crypto optimism has not only led to comments like “It’s almost essential for every investor to have at least 1% to 2% of their portfolio”.

But is the cypto millionaire also putting his money where his mouth is?
Novogratz raised $250 million USD to launch a cryptocurrency merchant bank known as Galaxy Digital. However, despite Mike Novogratz’s crypto optimism, it is unclear how much skin in the game he has in the venture.

The investment firm will host a cryptocurrency trading desk, offer asset management and advising services, and invest in emerging blockchain projects. In other words, Galaxy Digital is aiming to become the “Goldman Sachs of crypto”

Moreover, Galaxy Digital and Bloomberg officially launched the Bloomberg Galaxy Crypto Index (BGCI), an index of the top 10 global cryptocurrencies weighted by market capitalization.

In a statement from Bloomberg, Alan Campbell, Global Product Manager for Bloomberg Indices stated:
“Today’s launch of the Bloomberg Galaxy Crypto Index reflects our clients’ growing interest in cryptocurrencies… The index brings our rigorous approach to index construction to cryptos and will provide investors with a transparent benchmark to gauge the performance of the broader market.”

“Galaxy Digital is aiming to become the “Goldman Sachs of crypto”

Mike Novogratz’s crypto optimism doesn’t stop there. Novogratz believes that the New York Stock Exchange will implement cryptocurrency trading desks within the next six months and that falls in line with Goldman Sachs recent announcement to opening a bitcoin futures trading desk.

But traders/investors should also keep Mike Novogratz’s crypto optimism in check.

In a piece entitled, Where Next For BitCoin it explains that cryptos (a threat to the central bank’s fiat money empire would be rigged (alongside precious metals) to the downside. I explained how it would be done.

The CBOE Bitcoin futures market was set up four weeks, put another way the big guns are now in position. Institutions (so-called smart money) are using the futures product to slowly but surely build a short position in bitcoin. According to the CFTC Commitment of Traders report (available CBOE futures), non-commercial traders held a net short position of around $30mn as of Tuesday, Dec 26, or around half of the total open interest.

Meanwhile, many smaller retail investors are still convinced that Bitcoin will rise “bullish bets are 3.6 times more common than bearish ones,” according to the CFTC report.

Since the CBOE Bitcoin futures market was created four weeks ago Bitcoin has been sliding from its all-time high of 19,000 USD.”

To put it simply, Bitcoin and the entire crypto market has been hijacked by the very central banks that view the new digital currency as a financial risk. That is why Bitcoin like any other asset that threatens the central bank’s money power is being squashed. The future of cryptos can only exist under the central bank’s foot.

So Mike Novogratz’s crypto optimism places too much emphasis on functionality but it fails to factor in Machiavellian politics of power (control). Anything that threatens the central bank’s money power is bad and must be taken down. Watch Fed Bullard bash cryptocurrencies.

TRADING SOFTWARE

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.