Mike Novogratz, the billionaire investor who once called himself the “Forrest Gump of Bitcoin”, called the recent turmoil in the cryptocurrency industry a “credit crunch in its own right” and acknowledged that he was “very wrong” about the magnitude of the leverage. in the system.
“I don’t think people expected the magnitude of the losses that would appear on the balance sheets of professional institutions that caused the daisy chain of events,” Novogratz said at the Bloomberg Crypto Summit on Tuesday. “It turned into a full-fledged credit crunch with a complete sell-off and huge damage to confidence in the space.”
The founder of Galaxy Digital Holdings Ltd., who was a big promoter of Terraform Labs, the company behind Terra and Luna, said the lesson learned from the stablecoin’s collapse was that the industry and retail investors “really very, very little risk management concept.
Bitcoin has plunged since its peak last year, trading in the $19,000-$22,000 range as investors recover from a rout that coincided with a falling stock market and was exacerbated by implosions in industry.
TerraUSD, or UST, lost its peg to the dollar in May and, along with its digital counterpart Luna, saw almost all of its value disappear. This sparked what is called a “crypto winter,” with Celsius and Babel, as well as hedge fund Three Arrows Capital, dragging the industry down.
Novogratz blamed regulators for not doing enough to protect investors and allowing institutions to exercise enormous leverage. He compared the fallout from crypto to the collapse of Lehman Brothers during the financial crisis and called for more transparency and disclosure in the industry.
“I don’t know what the SEC should have done, could have done, or could have done, but they did little to protect retail investors,” Novogratz said.
• Novogratz said his cardiologist recently lost $1 million in the collapse of Celsius.
• He said the “worse is over” in the crypto industry and that while current issues may have heightened retail investor distrust, the case for • Bitcoin is still strong, especially then that central banks around the world are fighting inflation.
• He called Bitcoin an “anti-populist” asset that will rise in value in part because politicians from both parties overspend.
• He thanked Senator Joe Manchin for rejecting more government spending.
• He predicted that Bitcoin will eventually reach $500,000.
This article was provided by Bloomberg News.