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Speaker 1: We have Galaxy Digital founder and CEO Mike Novgrats joining me.

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Speaker 2: Now, Mike, talk to us about what you're seeing under

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Speaker 2: the surface.

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Speaker 1: I think a lot of people are watching bitcoin go

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Speaker 1: absolutely parabolic and wonder what is exactly driving a slow

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Speaker 1: who's driving in.

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Speaker 3: Well, listen, you know, this is probably the first time

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Speaker 3: in the history of bitcoin that we have true price discovery.

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Speaker 3: And what I mean by that is this is the

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Speaker 3: first time that anyone who wants to buy it has

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Speaker 3: easy access to buy it. And so right baby boomers

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Speaker 3: have eighty five trillion dollars of wealth. Their wealth is

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Speaker 3: for the most part managed to register investment advisors who

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Speaker 3: now at least half of them or some portion of them,

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Speaker 3: can just buy the etf And so you're seeing a

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Speaker 3: step function in new owners of bitcoin, which is driving

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Speaker 3: I would say, a frenzy in the whole crypto ecosystem. Right, So,

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Speaker 3: how crypto always works is Bitcoin gets bought and some

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Speaker 3: people sell a little bit to buy ethereum and they

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Speaker 3: try to play the catchups and the alt coin and

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Speaker 3: I would say we've gotten the very frothy, frothy levels.

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Speaker 3: You can see it in the funding rates of the

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Speaker 3: old coin market. How much you get paid to actually

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Speaker 3: lend out your coins in bitcoin ethereum and in all

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Speaker 3: the alts and so cause you saw it in the

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Speaker 3: equities to public equity markets, right, micro strategy Marathon, all

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Speaker 3: the kind of public equity Bell Weathers really went parabolic

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Speaker 3: along with Bitcoin, and so I wouldn't be surprised to

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Speaker 3: see some correction in some consolidation. But I'm very loath

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Speaker 3: to pick a bitcoin high because I really do believe

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Speaker 3: this is price discovery. Will we test the old high,

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Speaker 3: most likely, and you'll probably have some consolidation, But I

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Speaker 3: still think we're gonna end a year much higher.

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Speaker 1: It's interesting to hear you kind of come in with

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Speaker 1: some caution in the middle of this euphoria. It begs

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Speaker 1: the question, what's also the new low?

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Speaker 3: You know? We broke out from forty five thousand, you know,

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Speaker 3: and so that would probably be what should hold us

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Speaker 3: if there's a real correction. You never know why corrections comes.

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Speaker 3: Something happens and people, you know, shift mindset, and there's

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Speaker 3: a lot of people that have bought recently. I don't

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Speaker 3: think it'll get there quite frankly, I think if it corrects,

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Speaker 3: it probably collect corrects to the mid fifties before taking

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Speaker 3: off to the to the new high, you know, first

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Speaker 3: of the old high that sixty eight to sixty nine thousand,

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Speaker 3: where we got pretty close. But I do think then

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Speaker 3: you're going to see and partly this is you know,

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Speaker 3: if you look at Fidelity or any of these big

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Speaker 3: platforms that have so much baby boom or wealth, just

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Speaker 3: shifting two to three percent, one to three percent of

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Speaker 3: those assets encouraging their customers to shift to bitcoin over time,

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Speaker 3: which has been an amazing diversifier, is a monster number. Right.

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Speaker 3: You think about it, like I said, eighty five trillion

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Speaker 3: of baby boom or wealth. You know, three percent of

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Speaker 3: that is two and a half trillion, right, The whole

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Speaker 3: market cap a bitcoin is only a a little more

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Speaker 3: than one point two trillion. And so again we're gonna

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Speaker 3: see a step change function. We're in the process, and

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Speaker 3: I like to call a price discovery. A good friend

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Speaker 3: mentioned that. I was like, he's dead right, that's what

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Speaker 3: it is.

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Speaker 1: Well, even if you're worried that we won't hit the

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Speaker 1: new highs right away begs the question where do you

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Speaker 1: think bitcoin is a year from now?

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Speaker 3: Much higher? You know, listen, how do you put yardsticks

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Speaker 3: around something. Right. We know gold is a twelve trillion

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Speaker 3: dollar asset. Bitcoins about a tenth of a tenth of gold.

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Speaker 3: Could bitcoin be half of gold at one point? Sure

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Speaker 3: it could, it will be, and at one point it

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Speaker 3: will be larger than gold. Right again, for every Charlie

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Speaker 3: Munger got to rest his soul who passes away. That

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Speaker 3: money is finding its way into gen z and millennials,

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Speaker 3: and they feel much more comfortable with digital gold than

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Speaker 3: old clunky gold. I'm kind of halfway in between. I

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Speaker 3: like a little of both. I got some gold coins

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Speaker 3: and we give out on our podcast because it's you know,

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Speaker 3: you can touch it. But I go to a lot

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Speaker 3: more bigcoint than I do goals.

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Speaker 1: So what does this mean for the new people getting in?

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Speaker 1: Do you worry at all at this point that a

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Speaker 1: lot of these retail investors in particular are buying it highs.

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Speaker 3: Listen, in every mania, in every excitement, people are going

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Speaker 3: to buy at the wrong level because it feels easy,

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Speaker 3: and then they're going to get washed out and they're

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Speaker 3: going to sell at the wrong level, and then it's

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Speaker 3: going to go back up and they're going to lift

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Speaker 3: Say I can't believe I sold like that's just part

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Speaker 3: of speculation, and it's part of investing. You could say

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Speaker 3: the same with Navidia or Tesla or anything that you

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Speaker 3: know has monster moves. Everyone has fomo, and so yes,

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Speaker 3: some investors are going to buy at the wrong level

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Speaker 3: and then stop out at the wrong level. What has

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Speaker 3: been unbelievably impressive about the core bitfoin community is just

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Speaker 3: how resilient they've been down. I remember doing an interview

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Speaker 3: with you a year ago, you know, at eighteen thousand,

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Speaker 3: and the core bitcoiners just took pain. And so I

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Speaker 3: don't think the core group of people that I've owned

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Speaker 3: this thing and really loved it and promoted it, they

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Speaker 3: are those sellers there, Michael Saler ain't sell it. And

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Speaker 3: the you know, new people are going to kind of

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Speaker 3: ease in. Listen, I don't think you're buying it into

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Speaker 3: your four O one k and selling it a month later, right,

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Speaker 3: And so most of this new money, I think it's

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Speaker 3: going to be sticky money or hoddl er money in

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Speaker 3: crypto terms. But the retail, you know, the young speculation

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Speaker 3: that's happening on you know, all the apps and on

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Speaker 3: Robinhood and on on coinbase and everywhere else that's going

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Speaker 3: to have blowoff tops and blow off bottoms, and people

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Speaker 3: are going to get shopped up like they always do

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Speaker 3: in specula Banias.

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Speaker 1: Listen, if you think about what's happening right now as well,

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Speaker 1: you have to wonder with the having around the owner here,

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Speaker 1: how much is already priced in?

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Speaker 3: You know again, Paul Tutor Jones taught me, like year

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Speaker 3: three of my Wall Street career, prices are set at

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Speaker 3: the margin. When we have more marginal buyers than marginal sellers,

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Speaker 3: prices go up. And that's what I mean by price discovery.

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Speaker 3: There's a new army of buyers. There's an army of salespeople.

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Speaker 3: I mean, what Blackrock is doing is breathtaking, right, that's

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Speaker 3: an army of salespeople being endorsed by their CEO saying, guys,

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Speaker 3: this is an important part of the future. We didn't

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Speaker 3: have that six months ago, and so I do think

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Speaker 3: like it's going to be hard to figure out where

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Speaker 3: equilibrium is in the next six to twelve months.

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Speaker 1: So say that the demand stays constant. Of course, we've

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Speaker 1: seen more demand with these bitcoin ETFs, and you have

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Speaker 1: the having where you'll have the new coins minted daily

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Speaker 1: dropping we know that miners don't control the whole market,

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Speaker 1: right there are still a lot of large holders out there.

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Speaker 2: What do you think the float really looks like right now?

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Speaker 3: Let's now they think about it before the having with

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Speaker 3: that a sixty thousand bitcoin, it's about fifty four thousand,

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Speaker 3: fifty four million dollars a day of new supply. Right.

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Speaker 3: We have one customer who is one of the retail

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Speaker 3: apps that pretty much buys thirty thirty to thirty five

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Speaker 3: million dollars a day just with us, and I'm sure

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Speaker 3: we're not the only person they buy with. Right. There

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Speaker 3: is a tremendous global demand for bitcoin. And so when

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Speaker 3: you see what's driving the market day to day right now,

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Speaker 3: is at eight o'clock at night, all the ETFs talk

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Speaker 3: about how much they bought or sold, and you know

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Speaker 3: it was five hundred million dollars or four minute. As

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Speaker 3: long as those numbers stay positive, you're gonna see some

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Speaker 3: momentum in bitcoin. The first day they go negative, people

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Speaker 3: are going to sell off bitcoin because they think, oh,

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Speaker 3: the ETF funds are going to slow. And so that's

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Speaker 3: that's kind of like the insider's way of looking at

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Speaker 3: this in the short term. But that's a little myopic.

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Speaker 3: You know, let's look each month at what the total

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Speaker 3: flows into bigin point is from that atf community plus

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Speaker 3: other communities. You know, after the having that fifty four

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Speaker 3: million and goes to twenty seven million. I mean, that's

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Speaker 3: that's that's a bit ass spread right now. And so

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Speaker 3: there's just not a lot of supply. This is one

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Speaker 3: of the least least inflationary assets, or most deflationary assets

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Speaker 3: there is. It's why, you know, when you see our

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Speaker 3: government spending so much money, people are are drawn to

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Speaker 3: this narrative.

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Speaker 1: So what do you think about certain features of the

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Speaker 1: market right now? You think about liquidity out there, you

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Speaker 1: think about leverage. Do you like where both of those

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Speaker 1: things stand or are any of those things out of whack?

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Speaker 3: Well, there's a tremendous amount of liquidity in the market

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Speaker 3: right now, a shocking amount. I mean I was looking

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Speaker 3: at just some of the volumes of the stocks that traded.

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Speaker 3: Forget the ETFs, what's traded record volumes yesterday, but look

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Speaker 3: at micro strategies volume yesterday, or Marathon or riots. You know,

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Speaker 3: the US equity market has monster volume. In crypto, you're

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Speaker 3: starting to see it on the exchanges, you know, and

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Speaker 3: the crypto exchange, and so plenty of liquidity, which means

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Speaker 3: that lots of people are getting leveraged. I think the

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Speaker 3: market is too leveraged right now. It just it happens

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Speaker 3: after huge runs you have leverage at the max, at

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Speaker 3: the highs, that there will be a washout. I don't

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Speaker 3: know when it is today, tomorrow, two weeks, a month,

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Speaker 3: it'll be. You know, I hate the call things healthy

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Speaker 3: washouts because it never feels healthy when you lose money.

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Speaker 3: And when there's a washout, the price will go down,

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Speaker 3: but there will be a washout. People can't sustain this

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Speaker 3: much leverage. And remember a lot of the offshore trading

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Speaker 3: platforms can give you fifty sixty seventy to one leverage,

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Speaker 3: and so you got a lot of you know, millennials

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Speaker 3: and gen z yoloing it and they will get some

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Speaker 3: will make money, and a lot of them will get

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Speaker 3: wiped out.

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Speaker 1: How do you describe the difference now, Mike, between the

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Speaker 1: leverage you're seeing in the system versus what you saw

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Speaker 1: in twenty twenty one that caused a lot of leverage

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Speaker 1: players to go bankrupt.

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Speaker 3: Well, I think the big institutional players have less leverage, right,

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Speaker 3: I mean, you know, you're you're not. Very few people

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Speaker 3: are buying an ETF with leverage, and the broker dealer

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Speaker 3: community or the kind of core players, I think, learned

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Speaker 3: a lot of lessons and so I always said, like,

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Speaker 3: we don't take a lot of leverage, Like why would

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Speaker 3: you take a lot of leverage on an eighty ball asset?

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Speaker 3: You know, in some ways it's the definition of insanity

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Speaker 3: to lever up an eighty ball asset. But retail still

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Speaker 3: loves leverage, and you're you know, you're going to see

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Speaker 3: this boom bush in the short run with an overall

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Speaker 3: really positive trend as people just keep deciding to allocate

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Speaker 3: some of their portfolio to big point.

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Speaker 2: Do you think it's that idea for there to be

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Speaker 2: levered bitcoin ETFs?

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Speaker 3: On that note, no, I don't. I think you know,

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Speaker 3: the libertarian side of me says, you know, two to

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Speaker 3: one leverage ETF people are big boys and they know

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Speaker 3: what they're doing, right, We've got products all over the place.

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Speaker 3: I don't want to be telling people, you know, how

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Speaker 3: much to better where they should bet. If I see

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Speaker 3: someone betting fifteen to one on something that's as voluable

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Speaker 3: as a bitcoin I'll tell them. I think you're you

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Speaker 3: need to go to your shrink here. That's just a

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Speaker 3: recipe for disaster. But I think you know, small amounts

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Speaker 3: of leverage and anything is fine.

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Speaker 1: Given the run up we've seen in bitcoin in and

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Speaker 1: of itself, what do you think about the crypto assets

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Speaker 1: outside of bitcoin, particularly with the interest you're seeing around

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Speaker 1: ethereum and the prospect of an ethereum ETF.

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Speaker 3: Yeah, I think that's the next big question for the community.

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Speaker 3: Will will eum ETF get through? I know it doesn't

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Speaker 3: feel like the SEC is making it easy, are we?

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Speaker 3: You know, the same logic that the bitcoin ETF got

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Speaker 3: through on, which was there's already a future's ETF if

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Speaker 3: you believed in that, how dare you not believe in

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Speaker 3: a can ETF holds for ethereum? And so my bias

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Speaker 3: is it gets through sometime this year, But we'll see.

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Speaker 3: You know, Gary Gensler has been very careful about not

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Speaker 3: declaring ethereum of security, and you can have your own

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Speaker 3: idea why I'm sorry not not declaring ethereum not a

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Speaker 3: security And you can have your own hypothesis why or

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Speaker 3: why not. I would say it opens the gate if

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Speaker 3: one proof of stake. You know, crypto protocol like ethereum

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Speaker 3: is not a security. Well what about the next one,

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Speaker 3: and the next one and the next one, And so

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Speaker 3: all of a sudden, his argument that these are all

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Speaker 3: securities would probably go out go out the window. And

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Speaker 3: so I'm sure there's a lot of internal to and

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Speaker 3: fro around this question. But the reality is we already

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Speaker 3: have an Ethereum futures ETF, and that was the logic

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Speaker 3: that got the Bitcoin ETF approved. And so my bias

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Speaker 3: as it happens, what about you?

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Speaker 2: Is Galaxy Digital going to go public in the United

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Speaker 2: States this year?

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Speaker 3: You could call the SEC and ask them when they're

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Speaker 3: going to accelerate the group of companies that have been trying. Listen,

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Speaker 3: we have had a very regulatory, unfriendly regime of the

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Speaker 3: last four years. We're seeing some thawing of that in DC.

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Speaker 3: I don't think it really thaws until after the election.

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Speaker 3: And I don't even think if listen, if the Republicans

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Speaker 3: win the election, it'll fall fast. But I think if

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Speaker 3: the Democrats, even if the Democrats rewin the presidency, I

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Speaker 3: think you're going to see turnover pretty quick. My sense

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Speaker 3: of the congressmen and senators in d C. Is they

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Speaker 3: know we need to do something, and you know it's

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Speaker 3: not politically the right time, but I think it'll happen

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Speaker 3: as soon as we get a fresh a fresh start.

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Speaker 1: Now, how do you see other crypto related stocks, particularly

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Speaker 1: the exchange. If you think about coint base, right, you

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Speaker 1: think about yesterday and a lot of people talking about

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Speaker 1: how you can still trade ETFs, but there was some

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Speaker 1: trouble trading on coinbase for some users yesterday.

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Speaker 3: Does that it's a good news, it's a good news,

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Speaker 3: bad news. They were so busy, they had so much

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Speaker 3: business that you know, the circuit breakers went off. And

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Speaker 3: so listen. I'm sure Brian Armstrong is a very you know,

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Speaker 3: smart guy, and they've got a huge engineering team and

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Speaker 3: they are probably working really hard. That doesn't happen again,

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Speaker 3: but it just tells you the uh, you know, they

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Speaker 3: are in pole position in this in this country, in

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Speaker 3: this market. And listen, if I'm candid, Uh, it's been

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Speaker 3: an American and unfair that some companies got through under

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Speaker 3: the J. Clayton regime and are able to access the

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Speaker 3: capital markets and a score of others, including US, did not.

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Speaker 3: Uh you know, they traded higher multiples. They trade with

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Speaker 3: great volume, uh, you know, and so it's a big

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Speaker 3: advantage being a US publicist and company.

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Speaker 1: Do you worry about missing the both though here because

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Speaker 1: you do see the ets now. So why would somebody

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Speaker 1: buy into a crypto related stock when you can just

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Speaker 1: buy into crypto Because.

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Speaker 3: We do a lot of different things. You know, Galaxy's

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Speaker 3: got an asset management business we have that literally went

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Speaker 3: from you know, a small asset management business. We've added

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Speaker 3: four billion in AUM in the last two months. We're

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Speaker 3: now over eight billion in AUM. We've got a sales

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Speaker 3: and trading derivative business that's booming. You know, We've got

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Speaker 3: our own mining business that's having an amazing run. And

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Speaker 3: so what I look, you know, we're very diversified. And

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Speaker 3: it feels really good right now. It didn't feel really

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Speaker 3: good a year ago, right it was a survival and

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Speaker 3: chase loose balls environment. And now it's you know, hire

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Speaker 3: more people and keep building. You know, tokenization is coming.

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Speaker 3: Will it happen this year or will it happen the

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Speaker 3: following year. My guess is it starts this year. That

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Speaker 3: will be the next big thing in crypto. And so

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Speaker 3: this transition, it didn't happen as fast as we all

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Speaker 3: thought it might right back in twenty seventeen. But we

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Speaker 3: are moving towards a tokenized world. We're moving towards a

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Speaker 3: more digital world, and you're going to see more decentralized systems,

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Speaker 3: not supplants centralized systems, but integrate with them. And so

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Speaker 3: this is not a two year sprint. It is a

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Speaker 3: ten year like you know, Force March. But this idea

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Speaker 3: of you know, crypto pipes and transparency and identity being

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Speaker 3: digital computers. When you think about AI talking computers talking

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Speaker 3: to each other, they're going to talk to themselves in

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Speaker 3: a digital currency, in a digital language. And so stable

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Speaker 3: coins are is going to be bigger and bigger, and

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Speaker 3: Galaxy is trying to be part of that whole ecosystem.

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Speaker 3: And so I think it's a it's a very different

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Speaker 3: play Listen, all the cryptical stocks right now are correlated

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Speaker 3: with with bitcoin because it's we're so early in the cycle.

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Speaker 3: But in the long run, I think you'll see big differentiation.

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Speaker 1: Hey, Mike, we're getting in some questions from viewers as well,

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Speaker 1: And you know, the question I'm getting is similar to

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Speaker 1: what I was thinking myself. If the narrative around Bitcoin

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Speaker 1: before was an inflation hedge, or then it became a

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Speaker 1: store of value. And now we're being asked bitcoin is

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Speaker 1: not used for commerce, What is its purpose?

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Speaker 2: What's the narrative about bitcoin?

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Speaker 3: What is I think it's always been the same. It's

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Speaker 3: in some ways it's a report card on fiscal prudence.

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Speaker 3: It is a store of value, you can like, it's

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Speaker 3: a debasement of currency, a hedge. And so I say

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Speaker 3: this all the time. A house in America in twenty

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Speaker 3: eleven cost one hundred and ninety thousand dollars. Today it's

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Speaker 3: four hundred thousand. That's the median house, right, So we

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Speaker 3: have debased our currency. We've had acid inflation at times,

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Speaker 3: we've had goods inflation. When you're printing as much money

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Speaker 3: as we're printing. When we have constant now five to

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Speaker 3: six per cent of budget deficits, hard assets go up.

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Speaker 3: And bitcoin is a hard asset for the new generation.

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Speaker 3: It is digital gold. And if you just keep on

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Speaker 3: digital gold, this is why people are buying it, and

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Speaker 3: that narrative is powerful. What would change that narrative, that

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Speaker 3: adoption narrative. Well, you know, we have a new president

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Speaker 3: that probably not Biden or Trump, and he gets Congress

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Speaker 3: to pass a balanced budget amendment or a Simpson Bulls amendment,

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Speaker 3: and we start trying to take that hundred and thirty

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Speaker 3: percent of debt to GDP back to eighty. Right now

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Speaker 3: it's headed to two fifty. And so that is literally

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Speaker 3: the added And you just look at the graph of

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Speaker 3: debt to GDP in America and many other countries, and

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Speaker 3: that is the advertisement for why people by Big Point.

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Speaker 2: Hey, before we let you go, Mike, quickly here, what

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Speaker 2: are your favorite trades right now?

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Speaker 3: You know, listen, it's like I said, it's been a

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Speaker 3: great run, and so trees don't grow to the sky.

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Speaker 3: The hardest part of managing risk is knowing when to

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Speaker 3: take a few chips off and to put it back on.

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Speaker 3: And so listen, we're really long this space. We're using

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Speaker 3: this uptick to hire more people to look at how

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Speaker 3: to build Galaxy for the future. So I guess be

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Speaker 3: among my own stock is my favorite trade.

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Speaker 1: Galaxy Digital founder n CEO Mike nevergratsy, thank you so

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Speaker 1: much for joining us thousands of dollars away from a

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Speaker 1: fresh high in bitcoin