A major Wall Street player; hedge-fund billionaire and former Goldman Sachs (NYSE: GS) partner Mike Novogratz, is betting big on cryptocurrencies.
“Ten percent of my net worth is in this space,” Novogratz said at a forum of the Harvard Business School of New York on April 19, 2017. Novogratz was referring to bitcoin and ethereum.
That means Novogratz might own around $230 million worth of the popular cryptocurrencies. The Forbes 500 named Novogratz as the 407th richest person in the world with a fortune of $2.3 billion.
Novogratz himself did not reveal any numbers or breakdown how much of the currencies he owns, CNN Money reported. Yet it appears the billionaire owns quite a bit of digital cash because he described cryptocurrencies as “best investment of my life.”
Novotgratz was an early investor in ethereum which CNN Money mistakenly calls Ether, CNN Money reported. Novogratz has also invested heavily in blockchain technology.
Mike Novogratz served as president of Goldman Sachs Latin America and head of fixed income, currencies and commodities risk in Asia for the investment bank. He joined Fortress Investments in 2002 and served as that company’s Co-Chief Information Officer before leaving.
Novogratz has also been an outspoken critic of income inequality and corporate America. He often criticizes companies like Walmart (NYSE: WMT) for low employee pay and management obsession with stock prices.
Bitcoin and Ethereum soar to New Highs
Mr. Market is justifying Novogratz’s faith in cryptocurrencies. Bitcoin ascended to a new high of $1,233.7 on April 22, 2017, Coinbase reported.
That means a single bitcoin’s value grew by $798.31 in just one year. Ethereum climbed to an impressive $48.85 a coin on the same day. That means it gained $40.84 in value in a year, according to Coinbase data.
It looks as if Novogratz is not the only bitcoin fan out there. One has to wonder how much of these value gains are being driven by big time investors like Novogratz?
Should we be Scared of Novogratz’s bitcoin play?
Nervous investors and bears might be scared of Novogratz’s cryptocurrency play because it might indicate he is skeptical of the equities and securities markets.
He may have moved $230 million into an easily convertible and highly-liquid hedging mechanism. That might mean Novogratz is cashing out because he fears some sort of crash or correction on Wall Street or a major decline in value of the U.S. dollar. Another possibility is that Novogratz wants a lot of cash in a highly-liquid investment so he can go bargain hunting after the crash.
That should make the rest of us nervous, because Novogratz might know or suspect something that the rest of us do not. Either way it’s a good lesson for the rest of us, everybody should have at least 10% of his or her money highly liquid cash. Everybody should also considering buying cryptocurrencies, especially bitcoin and ethereum because of their value growth.
Expect to see many more major investors come out of the closet and admit to owning large amounts of bitcoin or ethereum in the years ahead. Cryptocurrency is now a legitimate investment, a development that will have profound implications for the future of all investments.