Mike Novogratz says centralized crypto companies like Celsius and BlockFi have exposed the rot that
decentralization in crypto sought to remove.

Mike Novogratz, the CEO of Galaxy Digital, believes that cryptocurrencies are nearly through the storminess. Caused by a massive deleveraging in the market, which has cost more than $2 trillion in value.

In an interview with CNBC, Novogratz said that the market is down about 80% from its highs reached in January 2018. And he believes it has another 10% to go before hitting a bottom.

This is not the first time that Novogratz has made such a prediction. In September, he said that the market had another 25% to go before it found a bottom.

Novogratz has been one of the most vocal proponents of cryptocurrencies and blockchain technology. He is a former hedge fund manager and Goldman Sachs partner who has launched his cryptocurrency merchant bank.

On Thursday, while speaking on CNBC’s “Squawk Box.” The investor states that the current market situation appears to indicate that the worst of it is almost over.

However, after the “receding tide” showed how much some centralized companies were borrowing, the sell-off momentum appears to have calmed down. Prices are not going to rise again until things settle down.

Novogratz, who is long on bitcoin, Ethereum, and other major cryptocurrencies, said the market needs to “shake out” the weaker hands first.

The recent market rout has been triggered by a combination of concerns. Including tighter regulations in key markets such as South Korea and China, as well as fears of a wider crackdown.

Prices of bitcoin, Ethereum, and other major cryptocurrencies have tumbled sharply in recent weeks. With the total market value of all digital assets plunging from a peak of around $835 billion to below $400 billion at one point.

“I think the current sell-off is ‘healthy,’ and that the market is now ‘90 percent through’ the devastation,” Mr. Novogratz says.

He adds that he expects prices to start rising again around mid-year. As institutional investors begin to put money into the space.

Crypto bulls are confident that the market will eventually recover and reach new highs. Although some have suggested that it could take a few years for this to happen.

Meanwhile, Mr. Novogratz foresees that prices may continue to hover or possibly take fresh losses. Until the Fed backtracks or fresh money enters the market.

Can we go lower? Of course, we could,” he told CNBC. “It feels that we’re 90% through that deleveraging, but the problem is for you to go much higher, you need the narrative to re-pick and you need new capital to come in.” Novogratz says in a Tweet.

Novogratz lashes out at centralized crypto firms 

The Galaxy Digital CEO believes that some crypto firms will face problems including investigations and even prosecutions because of egregious misconduct.

He goes on to say that decentralized crypto firms, such as Compound and Aave. Have effectively functioned “as they were designed to,” with openness and so forth.

“But if you look at the centralized companies, I think there will be some that have real problems. And I think we will see investigations and even prosecutions.” He adds;

“I think the reason the prices are down so much is that people are worried about centralization. They don’t want to own these assets if they think the people running the assets are bad actors.

I think that’s why you see decentralized protocols doing so well, and the centralized protocols getting hammered.”

However, it’s large institutions that have entered the market and operated in secret. Triggering the enormous leveraging and inter-lending that is pushing most of them into bankruptcy.

Look at Celsius, for example, no one knew how much leverage they had. Or Three Arrows Capital. I think when all is said and done there will be accusations and prosecutions for fraud. There will be gross misconduct, you know, in some of these companies.”

James Atkins

I have been writing copy for blockchain-related projects since 2017. I understand the importance of being able to communicate clearly and effectively with both technical and non-technical audiences. By leveraging my understanding of the crypto industry trends, I can help increase adoption in this rapidly evolving landscape.