Mike Novogratz, the macro manager who left Fortress Investment Group in shame after two years of losses, is looking to start a $500 mln hedge fund to invest in cryptocurrencies, initial coin offerings and related companies.
The swaggering investor believes that Bitcoin is a huge opportunity, but probably a fleeting one, as he both believes in the opportunities, but also that this is all a big bubble.
Novogratz is putting his money where his mouth is though, as he will invest $150 mln of his own money and then top up the remaining $350 mln from family offices, wealthy individuals and fellow hedge fund managers.
“Biggest Bubble of our lifetime”
If Novogratz is successful with his $500 mln fund, it will be the biggest of its kind. However, the investor, who took a self imposed exile from Wall Street, takes an interesting view of digital currencies.
“This is going to be the largest bubble of our lifetimes,” Novogratz said.
“Prices are going to get way ahead of where they should be. You can make a whole lot of money on the way up, and we plan on it.”
Novogratz is renowned for being bold and brash, and it seems that the big swing and volatile digital currency space are exactly the kind of market he would thrive in.
“I sold at $5,000 or $4,980,” he said. “Then three weeks later I’m trying to buy it in the low $3,000s. If you’re good at that and you’re a trading junkie, it’s a lot of fun.”
Belief in the bubble
There have been polar opposite views on Bitcoin and digital currencies recently, from those who are in the know when it comes to investing.
People like Jamie Dimon of JP Morgan came out and slammed Bitcoin as a fraud, however, they were also seen to be looking in and exploring digital currencies and Blockchain technology.
These non-believers have recently seen their arguments backed up as governments and other regulatory bodies have cracked down in some areas of the world, namely China.
However, just like there are two sides to the Dimon coin, some even see the Bitcoin ban in China as an opportunity, and that is the way Novogratz is operating, despite calling it a massive bubble.
“In a lot of ways, this is a market like any other market,” Novogratz said. “You see the psychology of fear and greed in the charts the same way you’d see it in charts of the Indonesian rupiah or dollar-yen or treasuries. They’re exaggerated because of less liquidity and because you can’t get short.”