Novogratz Delays Crypto Hedge Fund Launch, Warns Of Drop To $8,000 But "Bull Market" Isn"t Over

Last week, Mike Novogratz surprised more than a few market participants by telling CNBC"s Fast Money that he was bringing forward the launch date of his crypto hedge fund; today he killed those plans.

On December 12th, Novogratz said he thinks bitcoin could hit $40,000 in 2-3 months. The Galaxy Fund was supposed to launch of December 15th.

The man who called the bitcoin rally sees this for litecoin from CNBC.

Today, Novogratz has shelved plans to laucnh his fund, warning that "we didn"t like market conditions."

 

Novogratz tweeted...

Looks to me like a short term top is in. My hunch is we consolidate between 10-16k for a while. Extreme would be 8k. Bull market isn’t over. Just pausing.

— Michael Novogratz (@novogratz) December 22, 2017

Adding that...

When insiders sell it always is important. @SatoshiLite

— Michael Novogratz (@novogratz) December 22, 2017

Warning traders that Bitcoin may drop as low as $8,000 in the near-term.

"It"s Going A Lot, Lot Higher": Novogratz Sees Bitcoin "Easily" Reaching $40,000 Next Year, Ethereum Tripling

 "It"s going a lot, lot higher"

       - Mike Novogratz discussing the price of bitcoin, Nov. 27, 2017

On October 10, pioneering cryptocurrency investor Mike Novogratz told CNBC that he expects bitcoin will top $10,000 in the next six to ten months; on that day Bitcoin was trading around $4,870. A little over a month later Novogratz got a nice birthday present: on Sunday, with Bitcoin trading just shy of $10,000, the former Fortress hedge fund manager"s bitcoin price target was reached in just a few short weeks, prompting the following tweet: "#bitcoin over 9k and #ETH over 460 is a pretty nice way to wake up on my birthday."

#bitcoin over 9k and #ETH over 460 is a pretty nice way to wake up on my birthday.

— Michael Novogratz (@novogratz) November 26, 2017

Bitcoin"s remarkable, exponential surge only accelerated after a mid-November plunge of more than 20% when Novogratz bought $15 million to $20 million worth of the digital currency, in the process acting as the first quasi-central bank price stabilizing agent. Since then, Bitcoin has only shot ever higher, and reached an all-time high of $9,800 on Monday (and trading above $10,000 on South Korean exchanges) at which point it was up more than 10x for the year and about 50% higher for November.

And, if Novogratz is right - again - it has a long way to go.

Speaking to CNBC"s Fast Money, Novogratz raised his price target aggressively, and predicted that bitcoin could quadruple in price by the end of 2018.

"Bitcoin could be at $40,000 at the end of 2018. It easily could," Novogratz said. As for "Ethereum, which I think just touched $500 or is getting close, could be triple where it is as well."

Novo"s comments came as the market capitalization of all digital coins on CoinMarketCap hit a record $304 billion Monday, although that too could be just the start: Novogratz said he expects that could increase by about six times to $2 trillion at the end of next year.

"There"s a big wave of money coming, not just here but all around the world," said Novogratz who plans to launch a $500 million digital assets fund through his new firm, Galaxy Investment Partners. He"s right about the influx of funds: demand from Asia, or almost exclusively Japan and South Korea since China halted all exchange-based crypto trading, has been the biggest contributor to bitcoin"s gains. Japanese yen trading in bitcoin - seen by many as an offshore proxy for Chinese buyers - dominates trading volume at about 62%, according to CryptoCompare. U.S. dollar-bitcoin trading accounts for about 21%, while trading in South Korean won accounts for about 9%.

While Novogratz" bullishness is hardly surprising - he is after all talking his book - he did make a good point: no matter how great the demand, the supply of cryptos remains fixed.

"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."

That mush is true: as we showed last week, bitcoin crashes roughly once per quarter suffering a dramatic double-digit decline, although as some have pointed out, in recent quarters the crashes have become more modest. More importantly, so far every dip has been furiously bought.

Novogratz also said that in contrast to oil and renewable energy products, companies cannot produce more bitcoin in order to meet demand since the digital currency"s supply is limited to 21 million coins.

And speaking of talking his book, Novogratz is certainly putting his money where his mouth is: he told CNBC that "probably over 20%" or "maybe even 30%" of his net worth is in cryptocurrencies, split roughly in half between bitcoin and ethereum. That allocation is not for everyone, however, and Novogratz doesn"t recommend retail investors put any more than 1 to 3% of their net worth in cryptocurrencies, or wealthier investors to put more than 5 to 10%.

Novogratz is not the only one to revise his price target as bitcoin shoots higher: last Wednesday, Fundstrat"s Tom Lee raised his mid-2018 price target for bitcoin to $11,500 from $6,000. That followed a similar upgrade last Monday by Standpoint Research"s Ronnie Moas, who raised his 2018 price target for bitcoin to $14,000 from $11,000.

Following Novogratz" comments, Bitcoin was trading at $9,780 late on Monday, its all time high. 

On monday, Ethereum hit a record high of $493.40 Monday, and was last trading at $478. If Novogratz is right, its price will be around $1,500 in roughly one year"s time.

Bitcoin Soars Above $9,000, Hits New All Time High On Burst Of Asian Buying

Less than 24 hours ago, we noted that Bitcoin had broken above the recent resistance level around $8,300 and hit a fresh all time high of $8,650, observing that the world"s biggest cryptocurrency by market cap is now rising at a pace pace that has put the $10,000 price target by both Mike Novogratz (and Jose Canseco) firmly in its sights. It didn"t take long however for bitcoin to find a new round of eager buyers, and in early Asian trading, a burst of buying out of Korea"s Bithumb exchange, has sent bitcoin surging another several hundred dollars higher, and around midnight ET bitcoin had surpassed $9,000, sending its maret cap to $150 billion, making it more valuable than corporations like Siemens, Mastercard or McDonald’s. The sharp gains come as the combined market capitalization for all cryptocurrencies also peaks at new highs – currently standing at just shy of $300 billion.

At this rate of appreciation, the crypto may hit the key psychological level of $10,000 in under a week. Needless to say, the long term chart is about as exponential as it gets, so as usual, buyer beware.

Bitcoin started the year just above $1,000, and the YTD gain is now above 900, which however pales in comparison to Ether"s nearly 5,000% YTD return and Litecoin"s 20x. One month ago, Mike Novogratz was the first to predict a $10,000 price in 6 to 10 months. It may come in that many weeks instead.  As a store of value, Novogratz likened bitcoin to digital gold, and said the technology is beginning to make "more and more sense" as we move increasingly into the digital. Novogratz continued to say that, while bitcoin is a bubble, the mania is justified, because it is a technological advancement that promises to fundamentally alter our lives.

"I can hear the herd coming" Novogratz said.

And bubble or not, Novogratz concluded eloquently on the extreme nature of cryptocurrencies" potential...

“Remember, bubbles happen around things that fundamentally change the way we live,” he said. “The railroad bubble. Railroads really fundamentally changed the way we lived. The internet bubble changed the way we live. When I look forward five, 10 years, the possibilities really get your animal spirits going.”

Bitcoin is set to become "the biggest bubble of our time," he added, and could reach $10,000 very soon due to fast-building interest. In retrospect, he may be right much faster than even he anticipated.

Massive Hedge Fund CEO "Ready To Add Bitcoin To Investment Universe"

Just yesterday we noted that billionaire hedge fund legend Mike Novogratz said "the institutionalization of [the crypto space] is coming... and it"s coming quick."

Novogratz said he expects major financial firms will soon start to offer bitcoin or similar products as an investment option, one that could be easily purchased over the phone.

“When it’s that easy, the price of bitcoin or ethereum is going to go much higher. And that is a lot closer than people think,”

How right he was as the CEO of massive hedge fund Man Group just confirmed they will "add bitcoin to its investment universe" once CME launches Bitcoin futures.

As BI reports, one of the largest hedge funds in the world might hop on the bitcoin trade.

Luke Ellis, the CEO of Man Group, the UK-based investor with $95 billion in funds under management, said the firm would include bitcoin in its "investment universe" if bitcoin futures successfully launch, according to a tweet by Reuters.

 

CME announced at the end of October that it would launch a bitcoin futures product by year-end.

 

On Monday, CME chairman and CEO Terry Duffy said such a product would likely be ready by the second-week of December.

Additionally, as CoinTelegraph reports, earlier today on Nov. 14, Multicoin Capital Managing Partner Kyle Samani revealed that he had met with an institutional investor with a $30 bln fund. The investor disclosed the fact that fund managers within the company are restricted to issuing checks with the minimum value or $300 mln.

“More. Just met with an institutional manager. $30 bln fund. Minimum check size $300 mln. Current crypto allocation: $0. We aren"t even close to the top,” said Samani.

Previously, even up until early 2017, it was not possible for institutional investors to allocate hundreds of millions of dollars in Bitcoin because the market was premature and the liquidity was limited.

In January of 2017, the market cap of Bitcoin was only $15 bln. The market was simply not deep and mature enough for institutional investors and large-scale hedge funds to commit.

In the past 10 months, the market valuation of Bitcoin has grown to $110 bln, with a daily trading volume of $4 bln. As such, Bitcoin has become more liquid than the most liquid stock on earth, Apple.

Finally, we note that Novogratz"s biggest regret this year has been not buying more cryptocurrencies when prices fell, because he knew that they would keep going up. He sees bitcoin, for instance, hitting $10,000 by March.

The basis of the price target of Novogratz was established by several indicators including the Metcalfe’s law, a widely acknowledged metric which has been utilized to measure the growth rate of communication networks like Facebook, and the likelihood of the entrance of institutional investors and retail traders into the cryptocurrency market.