Galaxy Digital CEO Novogratz on Crypto Market Outlook

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00:00So we're talking about crypto prices, and I'll pick your brains in a bit, but let's talk about

00:05the crypto legislation that you've seen in the U.S. It's been increasingly friendly. How do you

00:11think Trump so far has delivered on making the U.S. the Bitcoin capital of the world?

00:17So far, it's been a 10 out of 10. The old administration really was everything they

00:22could do to be anti-crypto, and we've gone 180 degrees. And so we've already got one piece of

00:27legislation called the Genius Act, which gives us a framework around stable coins, which is really

00:32important. There's one more big piece that needs to happen. It's called Market Structure Bill, and

00:37hopefully that happens either in the fourth quarter or early next year. But just as importantly, all the

00:43regulatory agencies, the SEC, the CFDC, FinCEN, the Federal Reserve, have all taken a very friendly

00:51posture to crypto. And so the U.S. went from way behind in crypto friendliness and crypto legislation

00:59to now the world leader. And because it's still the biggest economy, pretty much everyone's going to

01:04have to match what the U.S. is doing. And so it's crazy how fast that shift happened, but it's created

01:10a tremendous amount of enthusiasm, not just from retail, which traditionally is what fuels crypto

01:15prices, but from institutions. So Galaxy, our company, tries to sit in between institutions

01:21and the crypto community, and every big institution is reaching out to us. The fact that I'm here at the

01:27Goldman Sachs conference for financial leaders to talk about crypto tells you something, right?

01:31And so. So Goldman are among the institutions that have been engaged with you. Every single institution

01:37is trying to figure out what their role in as the world tokenizes and digitalizes. The SEC chairman

01:45made a speech about two weeks ago, which was stunningly important, where he said he thinks

01:50every financial market should move on chain. Like that was such a radical thought that Gary Gensler

01:57would say that would have been a zero out of 100 chance. And so it's going to take a long time for all

02:03financial markets move on change. But that's the direction things are happening. And so that's why

02:07you now, if you're a board of directors of a major company, you have to have a view on crypto,

02:13right? Before you can just ignore it. It's a small little crazy thing.

02:16It's a big change. We're here in Hong Kong. I wanted to get your thoughts on

02:20the prospects for an offshore yuan back stable coins. How are you assessing that? What is your

02:27sense of how much demand we could see from that? So, so far, almost all usage of stable coins

02:40have been in dollars and they've been for liquidity in crypto markets, right? So if I want to buy one

02:46crypto and you're always doing it against the stable coin and some for payments, remittances.

02:51In the not so distant future, the biggest user of stable coins is going to be AI.

03:00You're going to pick up your phone and say, buy my groceries. And your grocery agent who knows what

03:06you like to eat knows that you're on a diet or not on a diet is going to figure out what groceries to

03:12buy from where. And they're not going to send a wire instruction or a Venmo. They're going to

03:18send a digital currency over a crypto rail. And so sometime in the near distant future,

03:26I don't know if it's one year or five years, you're going to see explosion of stable coin

03:31transactions. And at that point, the euro stable coin, Galaxy has done a euro stable coin with

03:37partners that just getting started. So you think offshore yuan back is just a matter of time and how

03:44much potential demand wise do you think could be unlocked there? Listen, we have an unfortunate

03:51cold war between the U.S. and China, right, that the battle line now is being around AI,

03:58but also around currency strength. So you're going to see the U.S. currency is weakening right now.

04:03And cyclically, it's weakening. But the government wants dollarization in other places. So you're going

04:09to see the government push other countries to try to dollarize. And I think you're going to see China

04:14do the same thing. And we'll see whoever has a better economic policy in the long run will have

04:20a more stable currency. But I don't think I don't think it's a fait accompli that the dollar will always

04:27be the only dominant currency. Talk to us about deal making in the industry. We reported recently on

04:36the Solana Treasury that your company, along with Jump and Multicoin, might be exploring. Is that

04:42something you're going to be able to confirm? What's the thinking behind that? Yeah. And unfortunately,

04:49the SEC doesn't allow us to speak of things when you're when you're discussing it. So I can't talk

04:54about that today. But I can tell you is the whole treasury company movement, which has brought lots of

05:01activity into crypto. A lot of the reason prices of Ethereum are higher is because of these

05:06these two treasury companies, SBET and BNMR. I was a little bit skeptical that they would work so

05:14well. And they've worked unbelievably well. And it tells you there's still so many more people that

05:20are comfortable buying an equity than a crypto outright. And so it's like the aperture of people.

05:27You've warned previously, though, on these treasury plays that they may have peaked. Has that

05:32thinking change now? I think in the long run, you're going to have to provide a lot of value added

05:39to keep a premium over the underlying coin. Right. And so when some of these were trade five times the

05:46NAV of the coin, you really have to believe you're with a special team. I think you're going to see most of

05:54them trade closer to NAV of the coin and then they'll be like closed end funds. Fine businesses.

06:00The ones that are better run will attract more capital. The ones that aren't will trade at a

06:05discount and probably be swallowed up. OK, one last question for you before we have to let you go.

06:10Bitcoin, Ethereum. Where do you see it at the end of the year? Because you are more positive on

06:15Ethereum than Bitcoin, right? Listen, it comes and goes. Right. I think

06:23the markets are really challenging right now to predict. The equity markets are as

06:29as high as they've been. Right. And and there's tremendous bullish enthusiasm. And so you could see

06:36a correction there. So maybe not 150 on Bitcoin. You know, it's going to be either or. If we take off,

06:43if Ethereum can break through 5000, it will be much higher. Do you think it's going to be this

06:48year? If it's not this year, it'll be next year. I think there's a shot. Most likely it's this year

06:53because what normally happens is because of hedge fund economics, because of enthusiasm,

06:59when you've had a fast horse, it runs fastest the last two months of the year.

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