Michael Novogratz “Crypto Has a More substantial Upside than Gold & Safer than Stocks”
“Bitcoin is a store of value, like “digital gold,” and will unlikely be used as traditional currency for the next five years, the former Goldman Sachs partner and hedge fund manager Mike Novogratz told Bloomberg.
The Bitcoin bull expects the digital currency’s price to keep rising as more people pile into the idea of adding it to their portfolios.
He expects several banks and credit-card companies to catch up to PayPal’s recent decision to allow customers to transact in cryptocurrencies.
“It’s no longer a debate if crypto is a thing, if Bitcoin is an asset if the blockchain is going to be part of the financial infrastructure,” Novogratz said. “It’s not ‘if’, it’s ‘when’, and so every single company has to have a plan now.”
With the coronavirus pandemic running rampant worldwide, it is clear what many say about gold being the ultimate safe haven. Since the start of the epidemic, gold continues to make significant highs. However, billionaire investor Michael Novogratz believes that crypto has a more substantial upside than gold and is a safer investment compared to investing in the stock market given the current conditions.
Michael Novogratz is an ex-hedge fund manager for Fortress Investment Group, an investment firm managing approximately $45.5 billion of assets as of 2020. He was ranked a billionaire by Forbes in 2007 and ranked 317 on Forbes 400 with a net worth of $1.5 billion. Shortly before retiring in 2012, he began investing in crypto and has since become the founder and CEO of Galaxy Investment Partners.
This investment firm manages cryptocurrency and manages over $350 million in assets. Since then, he has been an advocate for crypto and even stated in 2017 that 20% of his net worth was invested in Bitcoin and Ethereum, an investment that has made him over $250 million in 2017.
For his perspective on the stock market, be believes that with the U.S presidential election just around the corner, stocks are not an ideal investment at the moment for multiple reasons. The first being that the U.S presidential election will cause volatility to stay high and that it’s essential to stay safe and to minimize risk.
Michael Novogratz “Crypto Has a More substantial Upside than Gold & Safer than Stocks”
The second reason is that presidential nominee, Joe Biden, has proposed a tax plan that could potentially cause a massive sell-off of stocks. He says, “There will be a time to buy stocks again but I think with this election literally 40 days away, if Biden wins, he’s raising taxes, and he’s raising capital gains tax, most specifically. The market is not going to digest that well.”
For instance, Joe Biden plans to increase the capital gains tax from 23.8% to 39.6% for the highest earners, an increase of over 66%, and the most massive increase in history. This has many economists worried as when the Reagan administration proposed a plan to increase the capital gains tax from 20% to 28% in 1986, the sales of stocks increased by 60%. So, an increase of that magnitude could cause many investors to sell their stocks right before the election to avoid the risk of paying more in capital gains taxes.
With the potential of many investors selling their stocks, many would be looking to invest their money in safe assets and many will look to gold. However, Novogratz says that he prefers bitcoin as opposed to gold, and the reason being that bitcoin has the potential to go up substantially.
For example, gold and bitcoin are similar assets but because of how relatively new bitcoin is, it is much more difficult to buy. This deters new investors and limits the price. However, if firms worked towards making it easier to invest in bitcoin, then there would be a massive increase in the number of investors which would cause the price of bitcoin to rally even higher.
Because of this reason, Novogratz believes that although gold will rise, bitcoin’s price will increase to “$50,000, 5X from here” in two years. Michael made these comments on September 27th, 2020, when the price of bitcoin was $10,721.
At the time of writing this article (October 26th, 2020), Bitcoin is currently at $13,120. An increase of over 21% over the span of one month.
Here is a written version of his interview: Bitcoin is Digital Gold
