Major U.S. companies have been avoiding the crypto market for a long time. And now, according to Mike Novogratz, a prominent investor and former hedge fund manager at Fortress Investment Group, there is a major reason for this.
The founder of Galaxy Digital, a cryptocurrency merchant bank, he recently talked about the issue at the Yahoo Finance All Markets Summit and asserted that bitcoin is soon going to experience ‘a renaissance’ and will ultimately be propped up by institutional investors. According to the analyst, many of the big U.S. companies currently have substantial amounts of money ready for investment and some have already shown significant interest in the cryptocurrency market, which is a good indicator of things to come.
The former Goldman Sachs partner predicted that the market will start to have major institutional entrants within the next two to three months and interest in the sector will be mainly driven by the fear of missing out. He also talked about why major U.S. financial companies have up to now kept away from the digital currency sector, saying that the lack of reliable custodial solutions is a major reason for this.
Mike also explained that major U.S. companies are usually uncomfortable working with small nascent firms offering these services as is characteristic of the budding industry, saying, “If you’re at the state of Wisconsin and you’re a salaryman working on the investment portfolio, you might not risk your job for a company named Xapo.”
He predicted that the most likely outcome of the present situation will be major Wall Street players starting to acquire smaller specialist companies in the cryptocurrency space that provide custodial services. The financial analyst believes that major institutional players are the key to the success of the industry.
The Mt. Gox Nightmare
The Mt Gox heist is still a major case study of what can happen when things go wrong while handling crypto, and no major U.S. financial company is prepared to handle such a scenario. Over 700,000 bitcoins valued at more than $4 billion at today’s market rate were stolen from the exchange which was based in Shibuya, Tokyo, Japan in 2014.
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