Former Goldman Sachs partner, Mike Novogratz distinctively poised himself as an early cryptocurrency bull with an institutional investment background. At the Bloomberg Invest Summit in early June 2018, Novogratz told reporters that the global cryptocurrency market is headed towards a $20 trillion valuation.
Blockchain Reminiscent of Dot Com Mania
Skeptics of cryptocurrency have compared the emerging markets to the $6 to $1 trillion collapse of the U.S. dot-com bubble, using January 2018 price action as an indication of fragile conditions and looming downfall.
In contrast to the Internet bubble of 1999, the sudden prevalence of cryptocurrency and its underlying blockchain technology is spanning across nations worldwide.
The global presence of cryptocurrency drastically overshadows the U.S. exclusive dot-com fervor that took place decades ago.
In December 2017, the global cryptocurrency market cap peaked at nearly $900 billion and currently sits at about $345 billion.
During the Bloomberg Invest Summit interview, Novogratz responded to criticism of the cryptocurrency market by stating:
“[Cryptocurrency] is a global revolution. The internet bubble was only a U.S. thing. It was rich U.S. people participating. [Cryptocurrency] is global. There are kids in Bangladesh buying coins. It is monstrous in Tokyo, in South Korea, in China, in India, and in Russia. We’ve got a global market and a global mania. This will feel like a bubble when we’re at $20 trillion.”
Waiting for the Dominoes to Fall
Fueled by institutional investors, the global cryptocurrency market will reach its greatest height when major investment firms, fund managers, and commercial banks join the bandwagon, perhaps in “fear of missing out” (FOMO).
Novogratz made clear that the previous price boosts in cryptocurrency were caused primarily by a majority of retail investors and traders rather than institutional money.
Despite early actors like Susquehanna International Group, few major investment firms have taken action and entered the growing cryptocurrency markets.
As the cryptocurrency markets continue to mature, stability and established regulation will likely attract investors waiting for safer market conditions.
Novogratz described his predictions on how the cryptocurrency market will reach a $20 trillion market capitalization:
“It won’t go there ($20 trillion) right away. What is going to happen is, one of these intrepid pension funds, somebody who is a market leader, is going to say, you know what? We’ve got custody, Goldman Sachs is involved, Bloomberg has an index I can track my performance against, and they’re going to buy. And all of the sudden, the second guy buys. The same FOMO that you saw in retail [will be demonstrated by institutional investors].”