Hedge fund manager Mike Novogratz, who is starting a $500 million fund to invest in cryptocurrencies, says the bitcoin rally still has some serious legs.
After surging more than sevenfold since December, the largest and most widely known digital currency will end the year at $10,000 from about $8,200, he said. Smaller rival ether will trade at $500 from almost $370 Tuesday.
Bitcoin is like digital gold in that “way back people chose gold to have value and it has value solely because people say it has value; bitcoin is built on an amazing technology, there’s a limited supply of it,” Novogratz said in an interview on Bloomberg Television. “This whole revolution came out of a breakdown in trust in the 2008 crisis.”
Bitcoin touched a record of $8,299 today, before tumbling as much as 5.4 percent after $31 million was stolen from a separate cryptocurrency known as tether. Those gyrations aren’t new as it’s been a tumultuous way up for the virtual currency, with three separate slumps of more than 25 percent all giving way to subsequent rallies.
But this doesn’t give Novogratz pause. “We’re in the second or third inning,” he said. “Because prices have moved so far people are nervous, you made a whole lot of money, there’s news so you want to book your profit and get out.”
At $500 million, Novogratz’s Galaxy Digital Assets Fund would be the biggest of its kind and signal a growing acceptance of cryptocurrencies as legitimate investments. For Novogratz, the fund marks a comeback to professional money management after humbling losses at Fortress Investment Group LLC and almost two years of self-imposed exile from Wall Street.