Bitcoin's massive rally is different from the 'speculative frenzy' of 2017 as more institutional investors buy in, says Mike Novogratz
Mike Novogratztold CNBC on Wednesday that Bitcoin's 148% surge this year is different from the retail-driven "speculative frenzy" of 2017, when the cryptocurrency reached $19,000 only to drop 78% a year later.
- This year's Bitcoin boom is driven by institutional buy-in and investors looking for a hedge against paper money, the
Galaxy DigitalCEO said.
- The investor said Bitcoin has "hit escape velocity" and will skyrocket to $60,000 by the end of 2021.
- Watch Bitcoin trade live here.
Bitcoin investors anxiously awaiting a crash following the cryptocurrency's 148% surge this year should know that this time is different, according to Mike Novogratz.
The investor told CNBC on Wednesday that the crash in Bitcoin's price after its record highs in 2017 was the result of a "global speculative frenzy" driven by retail investors. Now, institutional investors are adopting Bitcoin, and price of the cryptocurrency could reach $60,000 by the end of 2021, he said.
"You can't buy bitcoin at Citibank or Bank of America, but their strategists are talking about it," the Galaxy Digital CEO said. "We're seeing institutions buy into this, we're seeing high net worth families buy into this, across the board you're getting institutional adoption."
Novogratz explained that Bitcoin has "hit escape velocity," as investors around the globe view it increasingly as a store of value rather than a speculative vehicle. He said young investors on social media see bitcoin as "social money," while baby boomers view the cryptocurrency as a macro hedge against paper money. He also said that investors around the world are growing less trustworthy of fiat money as governments print more of it.
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Bitcoin's scarcity is helping drive its eye-popping rise, Novogratz added. In just the last month, the price has soared 54%.
"People are going to bitcoin because there's 20 million bitcoins that will ever be mined, there's complete scarcity in it. People believe it's a store of value. It's a social construct, and you can't change that," said Novogratz.
The investor expects Bitcoin to hit $20,000 by the end of 2020 and then pull back and hover around $16,000 before it skyrockets to around $60,000 by the end of 2021.
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