According to Mike Novogratz, CEO of Galaxy Digital Holdings, the continued financial difficulties of Digital Currency Group are unlikely to have a significant impact on cryptocurrency pricing.
Novogratz stated that he anticipates the present crisis facing DCG and its linked companies to “play out” during the coming quarter in an appearance on CNBC’s Squawk Box on January 10.
While the crisis facing Digital Currency Group (DCG) and Genesis is “not good news,” it won’t “include a lot of selling,” according to Galaxy Digital Holdings CEO Mike Novogratz.
“There are still a few overhangs, including DCG, Genesis, and Gemini, which will be resolved in the upcoming quarter. That won’t be wonderful, Novogratz remarked, adding:
Additionally, it controls the cryptocurrency exchanges Luno and CoinDesk as well as the consultancy firms Foundry and Genesis that provide institutional lending.
“I don’t think there will be much selling, it’s just bad news,” the speaker said.
The largest digital asset management in the world, Grayscale Investments, is owned and run by DCG, a significant crypto conglomerate.
In sharp contrast to Novogratz’s assertion, an Arcane Research analysis dated January 4 cautioned investors to pay attention to the “ongoing financial distress” at DCG since the consequences “may significantly harm crypto markets.”
It contended that if DCG filed for bankruptcy, the business may be obliged to sell significant holdings in its Grayscale Bitcoin Trust (GBTC) and other cryptocurrency-related trusts and liquidate assets, which would put pressure on cryptocurrency prices.
Nevertheless, Novogratz contended that during the past three months, despite “a lot of terrible news,” both Bitcoin and Ether have maintained “fairly steady” and have even increased recently. The market is currently “quite clean,” according to Novogratz, who was referring to investors who had recently sold or lowered their debt.
Early warning signs for DCG and Genesis appeared late in the previous year, when Genesis stopped withdrawals on November 16 due to “extraordinary market turbulence” brought on by the failure of FTX and Three Arrows Capital. Cameron Winklevoss, a co-founder of Gemini, said in an open letter to DCG CEO Barry Silbert on January 2 that Genesis, which is owned by DCG, has not repaid a loan to Gemini for $900 million that was due on December 31.
In a second letter, written on January 10, Winklevoss complained to the board of directors of DCG that Silbert and DCG had simply “pretended” to close a $1.2 billion hole in the Genesis balance sheet. He demanded Silbert’s immediate dismissal, claiming that he was “unfit” to lead the business. The Coinbase CEO’s recent move to lay off an additional 20% of his or her staff in an effort to further reduce operational costs was also addressed by The Galaxy CEO.
For growth stocks and cryptocurrencies, last year “was a huge washout, and anything related to it […] that had big costs and revenue declining – got pounded,” said Novogratz. I believe that all CEOs, including Brian at Coinbase, are acting rationally.
The future of cryptocurrency, according to Novogratz, is “not wonderful,” but it’s also not terrible. “Regulatory hurdles that we did not previously face. People will make savings and get by during this transition phase because we have time to mend and restore the narrative, he added.
- There won’t likely be a lot of selling during the DCG crisis
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