(Bloomberg) — Michael Novogratz, the founder of crypto financial services firm Galaxy Digital Holdings Ltd., said crypto markets “feel strong” this year, due to sellers’ exhaustion and the easing of restrictions in China, with Hong Kong warming up to the digital-asset sector.
“What’s driving crypto broadly this year is two things – all the selling that needed to get done was done,” Novogratz said during Galaxy’s earnings conference call on Tuesday. The other factor is increasing activities from Asia, he said. “China took the regulatory boot off the necks of their tech companies and that includes crypto.”
“It wouldn’t surprise me if we were substantially higher three months, six months, nine months from now,” he said, without giving a price target. He had predicted Bitcoin could return to $30,000 by the end of March. The biggest cryptocurrency by market value traded at about $27,000 on Tuesday in New York. Bitcoin has jumped about 60% this year, after tumbling 64% in 2022.
Even though trading of crypto has been banned in mainland China, the city of Hong Kong last year unveiled a plan to make itself as a center for digital assets and so-called Web3 firms. In recent months, Chinese banks have been directly reaching out to crypto businesses, and regulators in Hong Kong are set to host a meeting helping crypto firms with banking, Bloomberg News reported.
That contrasted with the ongoing regulatory crackdown on the crypto industry in the US, with banks warned by US regulators about the heightened risks of doing business with crypto firms. “It’s not good for America’s chance to lead this industry. It’s pushing people offshore and so we’re fighting back,” Novogratz said.
Galaxy Digital, which offers businesses ranging from crypto trading and asset management to mining, said it has established multiple redundant banking and brokerage relationships prior to disruptions in the commercial banking sector. Most of its deposits are at a “large US-based bank,” according to Galaxy, which declined to name the bank.
The company posted a fourth-quarter loss and said that the company’s liquidity position remains intact after the recent turmoil in the banking sector. The net loss was $287.8 million, compared with net income of $521.3 million in the year—earlier period. The loss was primarily attributed to unrealized losses on investments in its investments portfolio during the slump in token prices during the quarter ended Dec. 31, Galaxy said in a statement Tuesday.
The New York-based firm expects what it called net profits, which excludes impact from non-cash equity based compensation and investment portfolio valuation, during the first quarter from its operating businesses with market prices up so far this year. Galaxy has generated about $150 million of income before tax this year through March 24, according to its quarterly earnings release. It also expects positive gains from its holdings of liquid coins and investments for the first quarter.
For the full year, Galaxy posted a net loss of $1 billion, compared to net income of $1.7 billion for the prior year.
The company expects its costs for audit and legal to remain elevated as a regulated public company in the crypto industry. Galaxy Mining has doubled its capacity from the beginning of the year.
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