Galaxy Digital CEO Mike Novogratz mentioned crypto would not have a lot additional to fall, however it may stay in uneven sideways buying and selling earlier than new capital enters the area. Cryptocurrency costs have been tumbling all yr with different threat belongings because the Federal Reserve started elevating rates of interest to struggle persistently excessive inflation. The worth of bitcoin , the most important crypto asset by market cap, is about 70% off its November all-time excessive. Further, worry of contagion is excessive as strained crypto firms have been pressured to liquidate leveraged bets on cryptocurrencies. They have additionally been unable to meet mortgage reimbursement phrases , whereas others have acquired bailouts from FTX’s Sam Bankman-Fried . “It feels like we’re 90% through that deleveraging,” Novogratz mentioned on CNBC’s ” Squawk Box ” Thursday. “The problem is, to go much higher you need the narrative to pick up and you need new capital to come in.” “My instinct is it’s going to be choppy sideways for a while until either the Fed flinches and we get that macro narrative, or the damage is healed and people get liberated when the market starts going again,” he added. Risk administration within the crypto area On Thursday, Novogratz additionally defended the crypto business’s pursuit of decentralization, pointing to decentralized finance or DeFi platforms corresponding to Compound and Aave as tasks that “function the way they’re supposed to.” By distinction, he mentioned, personal, centralized firms presently within the highlight corresponding to Celsius and Three Arrows Capital have been in a position to stay tight-lipped about how a lot leverage that they had. “What we saw and hopefully doesn’t repeat itself next cycle is a horrific breakdown in risk management at companies that you would assume understood what risk management was,” Novogratz mentioned. “When all is said and done, there will be accusations and prosecutions for fraud,” he mentioned. “There will be gross misconduct in some of these companies when you just look at the amount of both leverage and inter-lending that went on.” “The original reason for crypto was more transparency, and ironically, we had centralized organizations on top of all the crypto and that’s where most of the problems showed up,” he added.
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