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Mike Novogratz says bitcoin will end the year at $10,000

Hedge fund manager says bitcoin should be compared to gold.

Hedge fund manager Mike Novogratz, who is starting a $500 million fund to invest in cryptocurrencies, says the bitcoin rally still has some serious legs.

After surging more than sevenfold since December, the largest and most widely known digital currency will end the year at $10,000 from about $8,400, he said. Smaller rival ether will trade at $500 from almost $370 Tuesday.

Bitcoin is like digital gold in that “gold has value solely because people say it has value; bitcoin is built on an amazing technology, there’s a limited supply of it,” Novogratz said in an interview on Bloomberg Television. “This whole revolution came out of a breakdown in trust in the 2008 crisis.”

Bitcoin climbed to a record $8,374 today after Novogratz’s comments. It had earlier tumbled as much as 5.4% after $31 million was stolen from a separate cryptocurrency known as tether. Those gyrations aren’t new as it’s been a tumultuous way up for the virtual asset, with three separate slumps of more than 25% all giving way to subsequent rallies.

Read Even a $31m hack couldn’t keep bitcoin down

But this doesn’t give Novogratz pause. “We’re in the second or third inning,” he said. “Because prices have moved so far people are nervous. You made a whole lot of money, there’s news, so you want to book your profit and get out.”

At $500 million, Novogratz’s Galaxy Digital Assets Fund would be the biggest of its kind and signal a growing acceptance of cryptocurrencies as legitimate investments. For Novogratz, the fund marks a comeback to professional money management after humbling losses at Fortress Investment Group and almost two years of self-imposed exile from Wall Street.

Many of his former Wall Street colleagues are far from sharing his enthusiasm. JPMorgan Chase chief Jamie Dimon has said anyone who buys bitcoin is “stupid” and will pay the price, while Neil Dwane of Allianz Global Investors said it’s a “scam for criminals around the world,” and Larry Fink of BlackRock said it’s an index to gauge the demand for laundering money around the world.

Novogratz, 52, was quick to point out, “all of those guys are over 60 and I’m not. There’s some truth to that in that it’s difficult for someone who didn’t grow up in a digital world to understand that we’re moving into a digital world.”

He has a lot of company. There are now more than 100 cryptocurreny-focused hedge funds, with 84 opening this year, up from 11 last year, according to research by Autonomous Next. As institutional investors start to dip their toes into cryptocurrencies, firms are scrambling to build the market infrastructure to make trading smoother, from regulated exchanges, to indexes and derivatives.

The most bullish crypto watchers are also struggling to keep up, having to update their already lofty price forecasts. Standpoint Research’s Ronnie Moas on Monday raised his 2018 price target for the second time this month, to $14,000 from $11,000. Douglas Kass of Seabreeze Partners also raised his 2018 forecast yesterday to an even higher $27,000.

Novograz said investors coming into the sector for the first time will keep boosting the bitcoin price, as it’s the cryptocurrency they’ve heard of the most.

“Bitcoin is the poster-child of the decentralised revolution,” he said.

© 2017 Bloomberg

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I hate it when they say there is a limited supply of bitcoins, i.e. max 21M. That is rubbish. There is an INFINITE supply thereof. Unlike bitcoins I cannot buy less that 1 share on the stock market. Unlike bitcoins I cannot own less than 1c in a rand. However I can own any fraction of a bitcoin: 1.0, 0.1, 0.001, 0.0000001, etc. Infinite fractions of bitcoins, hence an infinite supply of bitcoins.

As it stands currently Bitcoin can only be divided down to 8 decimal places. Regardless of how this changes, at any given time you cannot own less than one Satoshi.

Right so 8 decimal places equals 100,000,000 units per bitcoin. Multiply this by 21M bitcoins gives you 21,000,000 x 100,000,000 = 21,000,000,000,000,000 units or 21 Quadrillion units!!! You still want to tell me bitcoins are finite!!!?

Also even if bitcoin were limited, cryptocurrencies are certainly not. They’re popping up by the minute. So if bitcoin goes up, you can just buy ether or zcash, dash, ripple, or whatever bullsh*tcoin pops up the next day. So there definitely is a lot of supply. Go on the ethereum webpage and launch your own currency even if you feel there’s not enough

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