Mike Novogratz Says Majority of Crypto Hedge Funds Will Fail

CEO of crypto funding agency Galaxy Digital and former hedge fund supervisor, Mike Novogratz, said that two-thirds of the crypto hedge funds will fail because of this of the sharp downtown this year within the worth of these property.

Future of Crypto Hedge Fund

While talking on the Piper Sandler Global Exchanges & Brokerage Conference in New York, Novogratz said that hedge funds investing in crypto will in the end need to restructure. The exec additionally noticed that the present state of the crypto market is the consequence of the Fed’s elimination of stimulus in addition to Terra’s downfall that dented the investor confidence within the space.

“Volume will go down, hedge funds will have to restructure. There are literally 1,900 crypto hedge funds. My guess is two-thirds will go out of business.”

Hedge Funds Embracing Crypto

Novogratz’s feedback come at a time when conventional hedge funds are more and more dipping their toes into digital property. According to PricewaterhouseCoopers’ (PwC) 4th Annual Global Crypto Hedge Fund Report 2022, roughly one-third of conventional hedge fund respondents within the survey are already investing in Bitcoin and different digital property. So far, the hedge funds have stored their publicity restricted.

In reality, 57% of the hedge funds have allotted lower than 1% of their whole property below administration (AUM). Around 67% of these surveyed and at present investing within the market intend to deploy extra capital into the asset class by the year-end. Even these hedge funds not but investing in crypto confirmed that they’re in late-stage planning to speculate or wanting to take action.

While regulatory and tax uncertainty continues to stay a relentless barrier to the adoption, lack of infrastructure and the supply of service suppliers is one more problem that many hedge funds are dealing with from actively taking part.

Mike Novogratz and Terra Collapse

The crypto bull has additionally been criticized for his function within the Terra ecosystem. Interestingly, he had not solely invested in LUNC (previously LUNA) however even bought a tattoo. Galaxy Digital had invested within the Terra ecosystem since September 2020, lengthy earlier than the token cracked the highest 10.

Terra’s crash didn’t harm Galaxy a lot as a result of the company not solely diversified its portfolio, often took earnings fairly than letting all of it trip, leveraged a danger administration framework, and acknowledged its funding could be affected by macro occasions. He went on to say that the occasion was a studying alternative for a lot of gamers within the sector.