by Jamie Holmes
On November 27, billionaire and former hedge fund manager Mike Novogratz stated that the price of bitcoin could be a high as $40,000 by the end of 2018. The former hedge fund manager’s comments come as BTC-USD smashes all previous records, trading less than $100 away from the psychological $10,000 resistance.
Speaking to CNBC’s Fast Money, Novogratz stated “Bitcoin could be at $40,000 by the end of 2018. It easily could…” The billionaire pointed to the large influx of money into cryptocurrencies worldwide as one of the catalysts for the five-figure valuation, “There’s a big wave of money coming, not just here but all around the world.”
Moreover, Novogratz highlighted the fact there is no “supply response” for cryptocurrencies, as this new asset class has its supply schedule pre-coded, and no one can start bringing more bitcoin into existence just because demand is increasing. In contrast, to gold, oil, and renewable energy, the inelastic supply has been a major driver of the phenomenal surges in the prices of cryptoassets.
Back in April 2017, Novogratz publicly stated that he had ten percent of his wealth in cryptoassets like bitcoin and ether, with his first investment made in bitcoin during 2013, when it was less than $500 and beginning its first run to $1000. The billionaire also invested in ether when it was below $1 and has previously stated the importance of diversification.
Nevertheless, the former Fortress hedge fund manager stated on CNBC that his allocation to cryptoassets had increased to around 20 to 30 percent as the space outperforms all other investments. He stated his allocations are roughly equal for bitcoin and ether. Regarding the latter, he also stated that ether’s price could triple from its current levels, to around $1500. Comparing bitcoin to gold, he says he sees no reason why the cryptocurrency sector cannot achieve a market capitalization of $2 trillion by the end of 2018, as the cryptocurrency provides all the functions of money the yellow metal does, as well as improving portability and divisibility.
The former Fortress hedge fund manager is setting up his own cryptocurrency fund, called Galaxy Digital Asset Fund, which would be the largest of its kind and demonstrates the shifting sentiment in favor of cryptoassets among investors.
Novogratz’s prediction is notable since, in October 2017, he told CNBC Fast Money that the price of bitcoin would reach $10,000 “in the next six to 10 months.” At the time it was trading below $5000. In less than two months, it seems his October prediction will become true. Perhaps, also, his prediction about $40,000 will also be ahead of schedule. Interestingly, a logarithmic regression using bitcoin’s previous price action has mirrored the actual path of the price of bitcoin quite accurately up until now. The regression prediction puts bitcoin at $10,000 around 2018 and $100,000 by 2023.
As a final talking point, Novogratz stated that retail investors should allocate one to three percent of their wealth into bitcoin and other cryptoassets, whereas wealthier individuals should allocate anywhere between five and ten percent. Given there are more than 31 million millionaires globally, according to Wikipedia, which means that there is less than one bitcoin available per millionaire. While Novogratz has taken the bull by the horns and become one the first wealth managers to take the dive with bitcoin, once more affluent individuals take note of bitcoin, $40,000 may not seem like such an extreme prediction.