“Bitcoin could be at $40,000 at the end of 2018. It easily could,” the former Fortress manager said Monday on CNBC’s “Fast Money,” noting that the asset has significant upside due to its utility as “digital gold”.
Mike Novogratz on Bitcoin
Previously, Novogratz had forecast that bitcoin would reach $10,000 by the end of 2017. Although the global average bitcoin price had not quite broached that threshold at the time of writing, bitcoin had reached the five-figure mark on several South Korean exchanges.
Bitcoin has increased more than 1,200 percent for the year, and Novogratz believes that rally will continue into 2018 — albeit at a somewhat more conservative pace — on the heels of increased institutional activity within the crypto markets.
“There’s a big wave of money coming, not just here but all around the world,” he said.
Novogratz aims to facilitate that wave through Galaxy Investment Partners, a $500 million crypto asset hedge fund he is launching next year.
He expects that the introduction of these new market participants could help bitcoin “easily” reach $40,000, which would raise its market cap to approximately $670 billion.
But although bitcoin will remain the “crypto king,” Novogratz believes other cryptocurrencies — including ethereum — will catch its tailwinds and experience phenomenal growth as well.
“Ethereum, which I think just touched $500 or is getting close, could be triple where it is as well,” he added, predicting that the second largest cryptocurrency could see a threefold increase from its present level.The ethereum price reached a new all-time high of $493 on Monday and is currently trading at $477 on U.S. exchange Coinbase.
However, he cautioned that although the market’s present upward trajectory will continue, so will its volatility, and he said that he would not be surprised if the markets experience a steep correction in the short-term.
“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.”
Nevertheless, Novogratz believes that the market’s fundamentals will resist these bearish hesitations, enabling the combined value of all cryptocurrencies to rise as high as $2 trillion in 2018 from their present value of $300 billion.