Galaxy Digital founder and CEO Mike Novogratz thinks an overall economic recession will follow the current “crypto recession.”
In a new interview with New York Magazine, the crypto billionaire says he thinks the US could deal with an economic downturn through the end of 2023.
“My instinct is 18 months, maybe even a little shorter because I think the Fed is going to have to pause hiking rates by the fall, and I think that’ll get people comfortable to start building again.”
The chief executive also predicts there will be a regulatory crackdown on decentralized finance (DeFi).
“In some ways, the regulators are going to lick their chops and say, ‘Oh my goodness.’ But DeFi, for the most part, has worked. It just is worth a lot less. Where the big losses are, it’s really in this weird combination of CeFi [centralized finance] and DeFi.
Celsius and BlockFi were black boxes that investors put their money in, and then they did whatever they wanted with it. It wasn’t on-chain. You didn’t know what the leverage was unless you got under the hood. You didn’t know what their asset-liability mismatch was. They borrowed short, and they lent long. Those are the two ways you die a sudden death in markets.”
Novogratz admits Galaxy Digital made the mistake of being “too long” on crypto assets. However, he notes that other crypto companies made an even bigger mistake of taking more credit risk than they should have.
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