Galaxy Digital founder Mike Novogratz told investors that 2024 will be dominated by institutional adoption of cryptocurrencies, driven by the pending approval of a Bitcoin (BTC) spot exchange-traded fund (ETF).
During Galaxy Digital’s third quarter earnings report call On Nov. 9, Novogratz emphasized the firm’s belief that approval of several ETFs “is now not a matter of if, but when.” The fund manager partnered with Invesco to submit a spot Bitcoin and Ethereum (ETH) ETF application to the U.S. Securities and Exchange Commission in the third quarter of 2023.
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In November 2023, investor sentiment turned bullish, with prominent ETF research analysts predicting that the SEC would approve 12 major Bitcoin spot ETF applications by January 2024.
“2024 will actually be the year of institutional adoption, first with Bitcoin ETFs and then with Ethereum ETFs,” Novogratz said during the third-quarter earnings call.
“As institutions become more and more comfortable, if the government approves Bitcoin as a thing, you will see other allocators start to look at things other than that. So, money will flow into this space.”
Novogratz added that institutional investment could peak in 2025 as “tokenization and wallet” investments increase. The Galaxy Digital CEO added that a key focus in the U.S. landscape should be ensuring that U.S. dollar-backed stablecoins remain a core cog in the broader cryptocurrency ecosystem.
“We will continue to be led by the U.S. dollar. We would be better off having a U.S. dollar-backed stablecoin that reflects our values and is widely used around the world.”
Novogratz said a Bitcoin ETF would bring a level of institutional confidence and significant funding to the cryptocurrency space.
“This ETF gives us some breathing room and breathes life into the system. That brings capital and allows other things to flourish. But I think if you look at the long-term plan for cryptocurrencies, it’s achieved its goal.” he added.
The potential impact of an Ethereum spot ETF was also mentioned during the investor call. The CEO of Galaxy Digital said that given that Ethereum’s verification model is based on the staking model and staking yield, its possible approval may not be as popular as the Bitcoin ETF.
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Novogratz explained: “Unless they can find an ETF that actually rewards through staking, it’s going to be a sub-par product if it’s just people like us who own Ethereum and stake it. . ”
He added that if investors are looking at yields between 4% and 7%, the technical differences will be significant, depending on the staking method. Utility remains an important factor, with Novogratz stressing that different blockchains and their native tokens need to “serve a purpose” and have “something based on them” to maintain long-term value.
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