Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Bitcoin topping ninety thousand dollars for the first time ever.
Speaker 2: As the record rally continues and the rally kicked off
Speaker 2: by President elect Trump's victory last week ago. Today, one
Speaker 2: week to go. Today, we're going to bring in Crypto
Speaker 2: Bowl Mike Novogratz, Who's quot the most important thing to
Speaker 2: happen to digital assets in years joining us now, of
Speaker 2: course is Mike Novogratz. You know, Mike, when you think
Speaker 2: about just what has happened here just in crypto prices
Speaker 2: over the last couple of weeks is one thing. But
Speaker 2: I also want to get your view here into the
Speaker 2: larger view of things. We are getting many appointments. It's
Speaker 2: coming in rapid fire overnight. When you think about who
Speaker 2: the president elect wants to put around him, and you see,
Speaker 2: for example, Elon Musk and vi Veakwamaswami playing a role
Speaker 2: here at the end of the day, how does this
Speaker 2: all make you think differently about the policies you're going
Speaker 2: to see moving forward, How credible some of these policies
Speaker 2: can be moving forward, how you invest through them?
Speaker 3: Listen, I think one thing is clear with Elon and Vivek.
Speaker 4: They want to cut some of the spending out of
Speaker 4: the government.
Speaker 3: And so when I think of, you know, we have
Speaker 3: a six point seventy five trillion dollar budget of when
Speaker 3: you look at Medicare, social Security, and interest payments, that's
Speaker 3: fifty seven percent. If you throw a defense on top
Speaker 3: of it, you're like at seventy five percent, And so
Speaker 3: you only have twenty five percent to work with unless
Speaker 3: you're going to attack those those sacred spaces.
Speaker 4: Right, Medicare social Security have always been third rails. The
Speaker 4: easiest thing is the pressure of the FED to cut rates.
Speaker 3: Right, every twenty five basis points of rate cuts saves
Speaker 3: twenty five billion dollars.
Speaker 4: From your budget.
Speaker 3: Now, think about how many hundred thousand dollars employees you
Speaker 3: need to cut out of the government to save twenty
Speaker 3: five billion dollars, Like quickly, do a calculator and do
Speaker 3: the math right. And so the biggest fix for the
Speaker 3: government would be to get short rates down so our
Speaker 3: funding costs. And I think the story they're going to
Speaker 3: tell is we're gonna we're gonna need monetary policy because
Speaker 3: we're going to be really good on fiscal We're gonna cut, cut, cut, Now,
Speaker 3: if that's the case, it's great for the stock market,
Speaker 3: it's great for America.
Speaker 4: Uh, the proof will be in the putting. Can they
Speaker 4: cut right?
Speaker 3: We know trubles to cut taxes to spur growth, but
Speaker 3: Kenny cuts spending and and he he never has in
Speaker 3: his career.
Speaker 2: Well to that end too. Would you be a buyer
Speaker 2: of long bonds at this juncture or would you actually
Speaker 2: go short?
Speaker 3: With that kind of doubt, I think you've got to
Speaker 3: sell the long end every rally you want to sell. Listen,
Speaker 3: because if if the things are working, the Fed's going
Speaker 3: to cut rates right again, this idea of how do
Speaker 3: you how do you cut interest rate costs down in
Speaker 3: the eil Kirk steevens and so, I just don't think there's.
Speaker 4: A whole lot of value in a world.
Speaker 3: And listen, Bitcoin is telling you that gold, silver tells
Speaker 3: you that like the world is still worried. The only
Speaker 3: way you get out of thirty six trillion dollars of
Speaker 3: debt is to inflate it away. And you want to
Speaker 3: gracefully inflate it away. You can't have hyper inflation or
Speaker 3: you have chaos. Right, you want to run four percent inflation?
Speaker 4: That's hard to do. But that's the goal, right.
Speaker 1: So Mike, it sounds like you're a bond bear, but
Speaker 1: you're a bitcoin bowl And I want to get back
Speaker 1: to crypto here, and I want to talk about the
Speaker 1: possibility of a bitcoin strategic reserve. You think about this
Speaker 1: rally that we're seeing in bitcoin, which is one of
Speaker 1: the purest supply and demand markets, and one of the
Speaker 1: reasons I keep hearing is that there's a lot of
Speaker 1: optimism that we could see the United States government buy
Speaker 1: up to a million worth of bitcoin. Now that you
Speaker 1: do have all these crypto advocates in Congress, are you
Speaker 1: confident that we could see something like that?
Speaker 3: I still think it's a low probability, right. You know
Speaker 3: how Congress works. The House gets excited or the executive
Speaker 3: gets excited, in the Senate says calm down, right, that's
Speaker 3: the role of the Senate. And while the Republicans control
Speaker 3: the Senate, they don't.
Speaker 4: Have sixty seats. They don't have close to sixty.
Speaker 3: And so listen, I think it would be very smart
Speaker 3: for the United States to take the bitcoin they have
Speaker 3: and maybe add some to it and say we want
Speaker 3: to show.
Speaker 4: The world that we're going to be.
Speaker 3: A technology first country, a crypto digital asset first country.
Speaker 3: I don't necessarily think the dollar needs anything to back
Speaker 3: it up. We have the strongest military in the world,
Speaker 3: we have the dominant economy in the world, and the
Speaker 3: reserve currency we've earned, and to need to back up
Speaker 3: the reserve currency as counterintuitive. And so again, listen, if
Speaker 3: we get the bitcoin reserve, and as a guy that
Speaker 3: owns a lot of bitcoin, I will not cry, and
Speaker 3: if you see me crying, they'll be crocodile tears.
Speaker 4: I think bitcoin heads to five hundred thousand.
Speaker 3: Again, it's a it's a whole different paradigm because it
Speaker 3: forces every other country, and countries are already buying it.
Speaker 3: I've got a dear friend, the guy that actually turned
Speaker 3: me onto bitcoin in twenty thirteen, who's in the Mid
Speaker 3: East right now, and he said he's never seen anything
Speaker 3: like it. He's convincing more people to boy bitcoin in
Speaker 3: the three days he's been there than any time in
Speaker 3: his whole career. And their huge pools of capital, and
Speaker 3: so we're seeing something globally. When Trump advocated in Nashville
Speaker 3: that he was going to be a crypto president, a
Speaker 3: bitcoin president, and now he's the president. Let me tell you,
Speaker 3: other leaders heard that, and so I think we're strapping
Speaker 3: in for what could be an amazing rally.
Speaker 5: I want to get back to your point on you know, hyperinflation, Mike,
Speaker 5: or at least more than four percent. I look at
Speaker 5: a longer term chart of bitcoin, say five years, and
Speaker 5: in that run up post or during COVID, I always
Speaker 5: see an inflation indicator here. I know that there was
Speaker 5: a lot of helicopter money that held out, as well
Speaker 5: as people being home with nothing to do, But to me,
Speaker 5: it was an indication that at least this community saw
Speaker 5: massive inflation coming and that was born out. Do you
Speaker 5: not see the most recent run up as the same
Speaker 5: sort of signal.
Speaker 3: Yeah, listen, so when the government's printing as much money
Speaker 3: as they I mean, the bitcoin narrative, the only narrative
Speaker 3: really for bitcoin is it's a hard asset in a
Speaker 3: world where you're going to debase fiat currencies. Like that's
Speaker 3: the story. Forget any other story. Like you know, when
Speaker 3: bitcoin they say, well, we're going to be level two's
Speaker 3: and we're going.
Speaker 4: To do n FTS on it. I always think that
Speaker 4: just confuses the story. Eyes glaze over. The story is
Speaker 4: digital gold.
Speaker 3: It is a hard asset that's believed to be a
Speaker 3: hard asset by the people that participate in its community.
Speaker 4: And it's really hard.
Speaker 3: In a world of populism, not just in the United States,
Speaker 3: all over the world for governments to not want to
Speaker 3: spend more, and every single government is spending more than
Speaker 3: they take in.
Speaker 5: Isn't that run up to five hundred thousand? I mean,
Speaker 5: if it happens in the short term without a strategic
Speaker 5: bitcoin reserve, it's going to mean six seven.
Speaker 4: Eight yeah, yeah, personal in faction.
Speaker 3: Let me be really clear, I don't want it to
Speaker 3: happen in the short term unless there's a bitcoin strategic reserve,
Speaker 3: because that's a different story.
Speaker 4: Then it's just a scramble. It's a crazy scramble to
Speaker 4: get the hot commodity.
Speaker 3: If it would happen naturally, it means we're starting to
Speaker 3: have hyperinflation and then we start to lose civil society.
Speaker 3: Like in every country that you look at that experiences
Speaker 3: hyper inflation, the results are really crappy.
Speaker 2: Mike, You know, how soon do you get to five
Speaker 2: hundred thousand. That's kind of a stunning level to think about.
Speaker 2: But you know, we're probably going to hit one hundred
Speaker 2: thousand dollars this year if we keep on going at
Speaker 2: this rate.
Speaker 3: Yeah, so listen, the total market cap of gold I
Speaker 3: think is like sixteen trillion, right, and so that's eight
Speaker 3: hundred thousand bitcoin.
Speaker 4: So when does bitcoin become gold?
Speaker 3: Like there's a new gener that cares more about bitcoin
Speaker 3: than they care about gold. I'm turning sixty next week,
Speaker 3: and so I still own a bunch of gold.
Speaker 4: I'm an old guy. But let me tell you, no forty.
Speaker 3: Year olds on gold, no thirty year olds on And
Speaker 3: so as we see this generational shift, like bitcoin should
Speaker 3: match gold within five or ten years, and that gets
Speaker 3: you to eight hundred thousand. That's with current goal prices,
Speaker 3: I think gold's going higher.
Speaker 5: I always fear, you know, Tom Keene, Yeah, every time
Speaker 5: he mentions bitcoin, he's making fun of it, literally every
Speaker 5: time for the past decade exactly. And I always wonder
Speaker 5: if you know, did tribal elders in prehistoric times also
Speaker 5: make fun of their kids for bringing gold into the tent.
Speaker 1: Every month and a half, he has me on surveillance
Speaker 1: radio and just beats me up about bitcoin, which is painful. Mike,
Speaker 1: turning it back to you, first of all, happy early birthday.
Speaker 1: That's exciting. I do want to talk about galaxies approach,
Speaker 1: specifically to the ETF market when it comes to partnerships.
Speaker 1: I cover ETFs. I've watched you partner with Invesco, with
Speaker 1: State Street on different spot ETFs, but also these crypto
Speaker 1: equity ETFs. What is your thinking around partnerships. Why not
Speaker 1: just launched ETFs solely as Galaxy.
Speaker 3: And we're an institutional firm. We don't have giant retail salesforces,
Speaker 3: and those ETFs really end up being sold into the
Speaker 3: high net worth channels, right, and so we don't have
Speaker 3: an army of registered investment advisors, and so we partnered
Speaker 3: to rent those armies. Quite frankly, we think we've got
Speaker 3: knowledge in IP of this space and real understanding of it,
Speaker 3: and our partners you know, partner with us because of that.
Speaker 3: I think this State Street partnership is off to a
Speaker 3: great start. That the the they're just starting to market
Speaker 3: these equity funds, but the returns are.
Speaker 4: Spectaculum, and we started. You could have had a better.
Speaker 3: Start date and so usually one, you know, an ETF
Speaker 3: has great returns in drowsing capitals.
Speaker 4: So we'll see.
Speaker 2: Hey, Mike, you know I want to talk about the
Speaker 2: macro before we let you go a little bit more
Speaker 2: because we're talking about bitcoin and the run up. We
Speaker 2: talked about gold a little bit. The dollar in particular
Speaker 2: has had just a stunning run up. It's still up
Speaker 2: even more today. People are thinking that the dollar will
Speaker 2: really become much stronger under a significant tear off policy
Speaker 2: under Trump. But if you believe that the dollar, the
Speaker 2: dollar doesn't have as much value in the future. I mean,
Speaker 2: how do you think about this trade?
Speaker 4: Listen. You know.
Speaker 3: There's that expression the tallest pigmy like again you look
Speaker 3: up north. You know, I bought dollar Canada in the
Speaker 3: last few few days. You know, the US economy is
Speaker 3: winning relative to Canada, relative to Europe, relative to China,
Speaker 3: and so I think the dollar is going to be strong,
Speaker 3: certainly through the end of the year, maybe further.
Speaker 4: With this Trump victory.
Speaker 3: You know, normally you go with the breaks after an election,
Speaker 3: and the markets are telling you the dollar is going
Speaker 3: to be strong, and quite frank, our economy is strong, right,
Speaker 3: we have a very strong economy.
Speaker 4: I think one of the things that was kind of
Speaker 4: crazy is Biden.
Speaker 3: And Harris they never really articulated how strong the economy
Speaker 3: was right. Sixty five percent of America thinks we're in
Speaker 3: a recession.
Speaker 4: We're absolutely not in a recession.
Speaker 3: We've got a booming economy with a booming thought market,
Speaker 3: with more job creation than in a four years in
Speaker 3: history almost and so what's happening, which is real was
Speaker 3: seventy percent of Americans didn't like the direction the economy
Speaker 3: is going. The gap between rich and poor still is
Speaker 3: creating such division in this country.
Speaker 4: It's creating that polarization and a lot of people still
Speaker 4: feel left behind.
Speaker 5: We got to leave it there, unfortunately, but I hope
Speaker 5: we can get you back. Hopefully we can get you
Speaker 5: back in the studio when you're here in New York
Speaker 5: and Mike no regrets there.
Speaker 4: From Galaxy Digital