Hedge funds have ventured into the cryptocurrency market in recent years, but Mike Novogratz, a former Goldman Sachs hedge fund manager and founder and CEO of cryptocurrency bank Galaxy Digital, believes that not all cryptocurrency hedge funds will survive.
Mike Novogratz said that due to the sluggish market conditions this year, many cryptocurrencies have fallen sharply, and two-thirds of cryptocurrency hedge funds are expected to face bankruptcy. He recently pointed out at the Global Exchange and Brokers Conference hosted by the American investment bank Piper Sandler:
Hedge funds will have to undergo (bankrupt) reorganizations as volume gradually declines, and there are about 1,900 cryptocurrency hedge funds in the market, and my guess is that two-thirds of them will fail. Headwinds from the fall in cryptocurrencies, it was a catastrophic loss.
Mike Novogratz continued that the financial market’s reaction to the Federal Reserve’s withdrawal of economic incentives is the main reason behind the slump of cryptocurrencies in the past six months, and the collapse of Terra has also weakened people’s confidence in cryptocurrencies and decentralized finance.
In addition, Mike Novogratz also blamed the Terra crash on broader macroeconomic factors, saying, “It’s not strong enough to deal with the headwinds that come with Bitcoin falling, cryptocurrencies falling. It’s a catastrophic loss.” “
Mike Novogratz’s comments come at a time when traditional hedge funds are getting into digital assets. According to a recent Global Crypto Hedge Fund Report by PwC, roughly one-third of traditional hedge funds have invested in Bitcoin and other digital assets.
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