Mike Novogratz, founder and CEO of Galaxy Digital Holdings, thinks two-thirds of hedge funds investing in cryptocurrencies are doomed in the current market downturn.
"Volume will go down and hedge funds will have to restructure," Novogratz said Wednesday at the Piper Sandler Global Exchanges & Brokerage Conference in New York.
“There are a whopping 1900 crypto hedge funds.
I estimate two-thirds of them will go out of business."
The former manager of hedge fund Fortress Investment Group cited the financial market's reaction to the Federal Reserve's withdrawal of stimulus as the main reason for the plunge in token prices over the past six months.
Bitcoin is down more than half since a record high in November.
Novogratz also attributed last month's collapse of the Terra blockchain - in which he and Galaxy were investors - to the broader macroeconomic factors and not to flaws in the project.
Terra “wasn't strong enough to deal with the headwinds of falling bitcoin prices and falling crypto prices.
It was a catastrophic loss," Novogratz said.
"The CEO was incredibly smart and charismatic, and there was tremendous momentum behind what he was doing."
That said, Galaxy will continue to expand even in the downturn, unlike peers like Gemini Trust Co., which is shedding employees to survive the bear market, Novogratz said.
The New York-based crypto brokerage and asset management firm aims to be "the go-to place" after the downturn ends, the crypto billionaire said.