Mike Novogratz`s Galaxy Digital took a $134 million hit as the firm`s first ever financial disclosure released to Canadian regulators this week. Galaxy said it lost $13.5 million on digital assets and had $85.5 million of unrealized losses on those assets. The shocking breakdown in Bitcoin earlier this year was the reason behind these losses. Mr Novogratz launched the firm in November, a month before Bitcoin rallied to a high, near the $20,000 level. According to Novogratz the firm is “strategically positioned to help further institutionalize the digital and blockchain industry.” Galaxy Digital is a crypto merchant bank – one of several starting on Wall Street as a new wave of ex-macro and equity stock pickers step into this new investment product.
In the future of Galaxy, Mr Novogratz has plans to list the merchant bank on Canada`s TSX Venture Exchange. In order to list, Galaxy will buy Canadian crypto startup Coin Capital. There will be a reverse merger in this deal, according to sources. When Bitcoin plummeted earlier this year, the coin lost about 60 percent of its value. Of course, it has rallied off lows, taking it to $8,300 this week but it remains down approximately 40 percent since the start of 2018. According to CoinMarketCap.com the entire market cap for cryptocurrencies is down 51 percent this year.
The ongoing regulatory scrutiny by the FSA, the SEC and other entities has clearly resulted in obvious winners and losers in the digital currency world. We at Classiarius featured an audiovisual presentation the touched on this subject. In the above mentioned market plunge at the start of 2018, over 800 coins traded to 1 cent or lower. We believe in the long-term that many of these coins will not survive. However, long-term, this type of Darwinian market adjustment is what is needed.