Billionaire and crypto investor Mike Novogratz has forecast an $800 billion market capitalization in the next 12 months for cryptocurrency markets. He had earlier forecast the same market cap figure by the end of this year.
“I think we are building a nice bottom for the next move up,” he said in an interview with CNBC Crypto Trader, and added that the next price increase for cryptocurrencies would involve the introduction of custody solutions and regulatory clarity about their status. “We won’t take out $10,000 without those two things because that’s what brings the institutional investors in,” he said. Numerous hacks at trading exchanges and scandals associated with them have made cryptocurrencies a tough sell to institutional investors.
Bitcoin’s price has crashed by more than 70% after its highs in December last year, due to a combination of negative pronouncements from government officials around the world and bearish sentiment from traders. Cryptocurrency markets have mirrored bitcoin’s price movements. The overall market capitalization for cryptocurrencies peaked at $831 billion a week into this year. As of this writing, it stands at $301 billion. (See also: Billionaire Michael Novogratz Launches Index Fund For Customers).
A Revised Forecast
Novogratz, who is said to have invested 10% of his wealth in cryptocurrencies, had told CNBC’s Fast Money last November that bitcoin could “easily” hit $40,000 by the end of this year. He also forecast an overall market capitalization of $20 trillion for the crypto market. His views about crypto markets seem to have undergone a significant revision since then. According to him, well-known institutional investors, such as pension funds and sovereign funds, will not invest in cryptocurrencies unless they see a name that they can trust to hold them in custody. This means that existing custody solutions within the cryptocurrency industry, such as BitGo, might not be enough for institutional investors.
In recent times, North America’s largest cryptocurrency exchange Coinbase and France-based wallet startup Ledger have announced custody solutions. (See also: Coinbase Tries To Reel In Institutional Investors). The SEC has also been more forthcoming about the regulatory status of prominent cryptocurrencies, such as bitcoin and ethereum. At a conference in mid-July, Novogratz said a “herd of institutional investors” were making their way into cryptocurrencies. “Cutting edge pension funds and sovereign funds will come in first and, then, they’ll all get in,” he told CNBC Crypto Trader.
Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns small amounts of bitcoin and litecoin.