When Mike Novogratz, a former institutional investor, threw his weight behind a new crypto company, Galaxy Digital Holdings Ltd., many thought he was ahead of the curve. But according to recently-published financial discourses, the company, which is described as a multi-faceted crypto merchant bank, hasn’t been doing all too hot.
Galaxy Digital Isn’t Doing Too Hot
Galaxy Digital’s listing on the Toronto Stock Exchange (TSXV) last year was arguably a double-edged sword. While Galaxy Digital’s listing on open markets allowed it to secure serious financial backing from a public audience and garner clout, the firm has since been mandated to properly disclose its financials. In a press release published Monday, the New York-headquartered company unveiled its financial results for the fourth quarter, and thus, fiscal 2018 as a whole.
Although Galaxy made significant investments in Q4, investing millions into BitGo, Bakkt, Galaxy EOS VC, among others, it lost $97 million in the same time frame, up from the $76.7 million loss registered in Q3. Per the filing, much of this loss can be attributed to its principal investing and trading businesses, presumably due to the fact that November and December saw Bitcoin and other cryptocurrencies fall to fresh lows, far below what most analysts suspected.
In summation, the firm, seemingly primarily funded by Novogratz’s wealth, 20% of which is purportedly in Bitcoin and Ethereum, lost $272.7 million in all of 2018. Ouch. As the filing notes, much of these losses were incurred as a result of either the sale of cryptocurrency or paper losses, hinting that the firm still has many digital assets in reserves. This might just be true. The data revealed that at the end of Q4, Galaxy presided over 9,724 Bitcoin, 94,525 Ethereum, 2.4 million EOS, and 60,227 Monero, a sum that amounts to just under $50 million.
Despite all of this, Galaxy isn’t doing all too dismally. The financial report revealed that as of the end of Q4, Galaxy still owned $350 million in assets, half of which were equity/stake in prominent industry startups. And financials aside, Novogratz himself, who formerly worked as a partner at Goldman Sachs, has remained rather cheery. According to the aforementioned press release, he stated:
“While 2018 was a challenging year for the industry, I am pleased with the ways in which our team navigated difficult market dynamics, and believe we are well positioned to scale our business strategically over time. We have used our capitalized position to both identify and invest in a number of unique opportunities, while also continuing to build an institutional-quality platform.”
The former Wall Streeter adds that the financials have not shown the “notable increase in activity across” Galaxy’s businesses in the first portion of 2019, which is purportedly going to give the firm momentum to move forward with its head held high.
Novogratz Still Decidedly Bullish On Bitcoin
The lackluster financial performance of his firm aside, Novogratz still seems to be overwhelmingly bullish on the future of Bitcoin and other digital assets. In a tweet posted in early-February, the investor remarked that while he doesn’t expect for the cryptocurrency market to head north in the immediate future, institutions are likely to arrive into this ecosystem as a result of the “tons of activity under the hood.”
Realizing having tweeted about crypto in a while. It’s a grind. Don’t think we head north for at least a few more months. Always take longer for institutions to move. Very confident they will. Tons of activity under the hood. Stay the course.
— Michael Novogratz (@novogratz) February 1, 2019
On the matter of Bitcoin specifically, the investor did note that he is unequivocally sure that BTC will become digital gold. As reported by Blockonomi previously, Novogratz opined that just as every element on the periodic table corresponds to an atomic number, Bitcoin is the only viable store of value in the cryptocurrency landscape. He simply notes that Bitcoin’s economic rules and its characteristics, namely the mathematically-secured 21 million coin supply cap, the deflationary issuance curve, and the ability to be divided and sent across the world has him convinced that is a monetary phenomenon poised to change the world.