We've got sports betting and same-day options, and now betting on Korean stocks, right? Every young kid that used to buy Solana is buying Hynix or some memory company. And so a lot of the oxygen of that speculative frenzy shifted. There was a gold and silver bubble. It topped, right? That was the top. Crypto had that same topping pattern. It doesn't mean these things go back to zero. I think Bitcoin probably holds 60,000. There's too many people that have bought into the Bitcoin story as its own store of value for it to go away. But someone asked me what crypto was like this year. I was like, meh, meh, meh. You know, people just aren't as excited about it because there's other things to be excited about.
Today's number, $50.1 million. That's how much a T-Rex named Gus sold for at auction this week, setting a new record for fossils. Tell a true story. I actually bought a gun from Gus. He's my small arms dealer.
Has Michael Simyus forgiven us yet?
I'm not going to answer that question. You know why? Because I love the dad jokes. I don't want them to ever end. I know you're into the dirty stuff, but like, just objectively, the dad jokes are very, very strong.
By the way, did you see my new shades? My new peepers. Look at these.
You know where I am, right? You know what's going on here.
I know where you are. But maybe our audience doesn't. Where are you?
I don't like to be a Sharon. I don't want to talk about my kids without their permission. I'm in Charlottesville and I'm at orientation, which is ridiculous that I'm even here. I woke up yesterday, got to have breakfast with my son, despite how uncool he must have felt having breakfast with me. And then he basically told me that it wasn't really necessary that I dropped him off at his dorm where he was spending the night. But I'm like, 'No, I'm coming to your dorm with you. I'm up O dark 100 hours.' And so we go to his dorm hauling comforters, and there's all these nervous-looking parents with their, like, you know, sherpas and people bringing stuff for one night in the dorms. And I'm not exaggerating. We barely walked in. He turns around and hugs me and practically body blocks me out of the room.
And I'm taking my revenge. I picked up these bad boys.
At registration, and I've been wearing them. I wore them out last night. So I came down here thinking, and I said to him, 'I apologize, but during the middle of the day, I'll have like two or three hours of podcast.' I haven't seen him since 8 a.m. yesterday. He hasn't, like, he texted me late night last night. I called him. I'm like, 'Are we getting together? What's the deal? We having dinner?' And he wrote back, 'Is it important?' That's what I've gotten back. And I'm like, 'No.' And he goes, 'I'll call you later tonight.' Didn't call me. Anyways, so I'm in Charlottesville. What are you doing at...
That's amazing. It sounds like you're having an amazing time. Just to clarify, does he have activities that he has to attend to? Like, is he, like, meeting all his friends? Because in that case, I gave him a pass because he needs to kind of focus on socializing, being cool, etc. Is that what's going on, or is he just, you know, chilling without you?
No, he's busy. And what you realize, and you have a long time to prepare for this emotional trauma, but you have these mixed emotions of, we've clearly done something right. He's at launch. You don't want a kid clinging to you and worried and calling you and anxious. So we've done something right, but you can't help it. You also, you're just really sad. You want your little boy back. I mean, it is, it's a very emotional time. But he's busy.
So I'm trying to continue talking so I don't get emotional. He's busy, but the parents' calendar, they have all day. They have schedules for us. We should not be here. Let me summarize everything I learned from the parents' events. Every child is on the verge of a mental breakdown. And but don't worry, we have 800 numbers and we have a SWAT team. If your kid even blinks suspiciously, a SWAT team of adolescent psychiatrists are going to drop from the skies and give your kid therapy and call you in accordance with HIPAA laws or whatever. And I'm like, if the kid isn't messed up, the parents are going to be messed up by the time they leave this session that has convinced us that every kid is an emotional tidepool.
Actually fascinating, this experience for you. It tells you a lot about where college is headed, where young people are headed. It's really interesting, but that's very exciting stuff. I'm very happy for you. And I'm very happy for your son. And I'll also say I met your other son for the first time. Talk about well-adjusted kids. Had a great time at the England game with you and your son and your buddies. And I had an incredible experience. England is, I mean, it's hard to talk about it because this episode will be out on Friday, so we don't actually know what the result of the semi-finals will be, and I'm not going to make any predictions because I don't want to jinx anything. But that was the highlight of the year, going to the England game. So thank you for bringing me.
I've been talking about this a lot. I feel like all the goodwill that was bottled up between nations and amongst each other is coming out of this World Cup. It was great to have you there. I've taken my sons to the last three World Cups. Now we're going to the final on Sunday. And to see all the UK, all the British fans roaring, and to see all the Norwegian fans also singing Sweet Caroline, I just thought it was, and I've described it, it's like cousins who love each other doing a sleepover when their parents are out of town, and despite the fact their parents are fighting all the time. I've been to World Cups. I wasn't at the World Cup in the US, and I think it was '94. I've been to Russia, Qatar, and now this one. This one is the best.
Okay. Well, we have a big episode to get into here. We're speaking with the one and only Mike Novogratz. So let's get into it. Today, we're speaking with one of the most prominent leaders in the crypto space. He founded Galaxy Digital in 2018, one of the industry's leading digital asset investment firms, and has been investing in crypto for more than a decade. Back in 2013, he invested $7 million of his own money in Bitcoin when it was trading for roughly $100 a coin. Last year, it peaked at more than $126,000. But recently, crypto has fallen on hard times. Bitcoin is down 27% year to date. Ethereum has fallen 37% and Solana has fallen 38%. At the same time, AI has emerged as the market's new obsession. And few investors have embraced that shift more aggressively than today's guest. So we wanted to talk to someone who's been at the center of both worlds to get his take on where he sees both industries heading from here. This is our conversation with Mike Novogratz, founder and CEO of Galaxy Digital. Mike, great to have you on the show. Thank you so much for joining us. I want to start with crypto, and then we'll talk about AI, and then we'll talk a little bit about your investment philosophy. But we have to acknowledge what I would say is the elephant in the room, which is Bitcoin is having a rough year, down 50% from its peak, down 47% from a year ago. The industry itself is struggling right now. I'd love to just get your views on why this is happening, what you make of it, and where things go from here.
A little context, right? Crypto was a storytelling business. I mean, I think I was well suited for it because I'm a storyteller by nature. And we told the story of this is an important technology. It's going to change the way the world processes information, moves value around, right? Like this was going to be the new plumbing for both the financial markets and the consumer markets. And that was the story. And some very bright and creative entrepreneurs, you know, Arthur Hayes created this idea of the leverage perpetual future on crypto tokens, and that really created the crypto markets because it allowed young people especially, but all people, to gamble leveraged on these stories. And it created a tremendous amount of excitement and capital into the system, especially after COVID when everyone was sitting around at home with nothing to do. And really kind of crypto chapter two, that grand move that brought Ethereum to 4,000 and all these tokens that you never heard of into multi, you know, tens of billions of dollar market cap, was really fueled by a gambling mania of young people wanting to get wealthy. They didn't want 12% returns. They wanted 12,000% returns. And a lot of capital got brought into the system. Some of that capital was really well spent, right? Building this infrastructure.
And we're now at this crossroads where crypto is actually going to be used, and that blockchain infrastructure, tokenized stuff, is going to get used all over the world. Some with crypto tokens, but not many. Many with traditional assets, perpetual equities, tokenized equities, stable coins, which are perpetual currency, I mean, which are tokenized currencies. And so it's a really interesting place at Galaxy. We're pivoting a lot of our business to helping trade companies build that infrastructure, right? This thing is the wallet where you'll have your tokenized equities, your currencies, your interest rate. You know, this is the neo bank of the future. And you see businesses outside of the US where financial services aren't as good, like Bybit, Binance, BitGet. Like no one here has heard of BitGet or Bybit. They have 100 million customers each. Right, Robinhood has 15 million. So these are monster businesses that connect to the rest of the world. And why crypto is exciting from a US perspective is the rest of the world wants the great American brands. They want to buy Apple and SpaceX and hopefully Galaxy and Google. I'd like to be in that category. And so the infrastructure of crypto is going to survive, be hardened and thrive. Those tokens that we used to trade, if it was Avalanche or Solana, some will survive, but many will drift down because they were really association tokens. And a lot of that was the fault of first Jay Clayton and then Gary Gensler of not really making the rules clear and prosecuting people. So people made crap tokens, like Franken tokens, so they could kind of, you know, skirt the rules and were too scared to have a token that gave you economic value. And then they were like, well, they're going up anyways, and so I don't have to give away the economic value, and I'm getting paid just for, in essence, creating a bunch of meme coins. And now you're seeing that, you know, those things drift down to less relevance, not to oblivion, because those communities still care about them, right? What was unique about crypto is you build community around a story. That community was fiscally incentivized to bring more people into their community, actually to drive the price of your token up. And man, they don't want to give up because they're like religions. And so screw with the XRP army and there's hell to pay.
It's really interesting to hear you say that because, I mean, you're describing this dynamic where it was this, as you say, speculative gambling mania that really drove this bull market. But it's interesting to hear that coming from you because that has long been the largest criticism of crypto, that some have said that there's something else. It's not just speculation. It's not just gambling. There's something more inherent to it. And it's usually been the crypto bears who say kind of what you're saying, which is it's a lot of leveraged gambling.
That's what drove the valuations to them. Listen, there is a technology that is being used. I mean, I'm literally doing deals with five or six hopefully big traditional institutions to help build infrastructure, right? You're going to see that crypto infrastructure, automatic settlement, being able to transfer value over the internet, used all over the place. Again, overseas, crypto is a lot more important than it is in the US. We have great financial services here. And the other thing that's happened is we've got sports betting and same-day options, and now betting on Korean stocks, right? Every young kid that used to buy Solana is buying Hynix or some memory company. And so a lot of the oxygen of that speculative frenzy shifted. And you just, like in macro, you saw it, you know, there was a gold and silver bubble. It popped, right? That was the top. That's what tops look like. Crypto had that same topping pattern. It doesn't mean these things go back to zero. I think Bitcoin probably holds 60,000, and if the Clarity Act passes, it's probably a 60-40 that it does, we head up a little bit higher. There's too many people that have bought into the Bitcoin story as its own store of value for it to go away. But someone asked me what crypto was like this year. I was like, meh, meh, meh. You know, people just aren't as excited about it because there's other things to be excited about.
How much of the value at this point, at the current price point? You mentioned that earlier on in the crypto cycle, a lot of the value was kind of propped up by this speculative gambling mania. A lot of that energy has been sucked out of the room. To what extent is that still a part of the crypto story at current price levels, in your view?
Well, listen, if you think about Bitcoin, Bitcoin is a story. It's if you trust me and I trust you, we trust this ecosystem. We're going to store our wealth there. And so it's always the value comes from trust, and there's a core group of people that that trust hasn't been eroded. And so I think again, Bitcoin is the most stable of all the cryptos because it has the biggest community. Ethereum, which was the second biggest, had a technology story, not a store of value story. Right? Bitcoin was digital gold. Ethereum had, we're going to build the base layer of trust, this giant database for people to build on top of. That story drew people in, but the valuation came because enough people believe it. It becomes money. It becomes money just like Bitcoin became money. And so they're still fighting that battle, right? Vitalik kind of having less of an impact, less presence, hurt that ecosystem because he was such a charismatic, in his own way, and brilliant and decent guy, right? I mean, he really is. If anyone gets a hero award for crypto, it's Vitalik. And the rest of them just in smaller and smaller ways, right? What's been hard about this crypto universe is there were lots of fraudsters and hypesters and scamsters. And so as you separate the wheat from the chaff, we'll see which of these big protocols are used to build on, right? And then there's new ones that come out, right? I mean, Robinhood is pretty interesting to look at just how quickly people have jumped on their chain.
I buy that Bitcoin is a legitimate store of value, and consumers on both sides of the trade, they get to decide what is a legitimate store of value. If a baseball card or Pokemon cards are a store of value, there's no reason that Bitcoin can't be. So I buy that. What I heard in your earlier comments is you think we're at a bit of a tipping point in terms of the underlying technologies creating utility across different industrial transactions or businesses. I haven't seen that. I feel like we keep getting promised this future where this underlying technology becomes this incredibly efficient plumbing infrastructure for all types of businesses. And I'm not saying it doesn't exist. I just don't. Can you give us some examples of how an end consumer or an end business is benefiting or has recognized the benefits of this tipping point of the incorporation of technology into consumers' or businesses' lives?
So the only really big one has been stable coins and with cross-border payments, right? So we have invested in a lot of different businesses that in Latin America and in the rest of the world that do cross-border payments and make that much more efficient. And those are, if you just look at stable coin usage, it's mostly out of the United States. And so some of it's store of value, just in dollars instead of Bitcoin, but a lot of it is in transaction value. And so I think stable coins is the first. We're seeing the very beginning of tokenized equities.
Explain what that is, Mike.
You take Galaxy in tokenized form, and it's the exact same thing as owning it. So there are 8 billion people on the planet, probably five and a half billion don't have access to a brokerage account, maybe six billion. And so if you're the kid in Bahrain and you want to have some savings and you want to buy a fraction of an Apple share, you're going to be able to buy it. Now I said earlier, most crypto kids want leverage. And so what's been interesting is the product that has grown faster than tokenized equities is perpetual futures, tokenized perps, real world assets. And so if you think about like this company XYZ, my friend Jeff Low built it, it's doing over annualized a trillion dollars of volume for a six-month-old company. But the SpaceX pre-IPO, it got all the volume, and it literally predicted the price to the dollar of where it was going to open, right? And so 24/7 trading, non-KYC, so anybody in that six billion just shows up with an account and starts buying and selling. And that I think shows you the demand globally when you've got six billion people that are outside of the financial system.
So this question is more about kind of how you've been able to manage your brand and Galaxy's brand. When I think of crypto, I think of some central players sort of adjacent, as Trump, because I would argue, and we'll get to this question, because of his ability to use crypto as an empty vessel for his corruption. Obviously, that's a loaded comment. There's FTX. That didn't end well. There's Michael Saylor, and I think Michael is seen as a legitimate business person. Obviously, there's real substance. Anyone who knows Michael's background knows there's real substance there. And also that he votes in a big way with his feet. I mean, his actions match his conviction. But at the same time, I think a lot of people look at some of his perma-bull on it with a decent amount of skepticism. And then there's Mike Novogratz and Galaxy. And you're sort of perceived as, and granted I'm known for glazing our guests, but it doesn't mean I don't mean it. But you're sort of seen as the clean, well-lit corner of crypto. You haven't been tarnished with this sort of carnival barker constant pumping. You're somewhat sanguine. You've called out, you know, fraud or hype where you see it. Just sort of curious as to why. What are the principles, and why do you think you've been able to, if you will, not get infected with what feels like a little bit Barnum & Bailey slash Adam Neumann-like, Sam Bankman-Fried-like skepticism here? What principles do you try and incorporate into the firm and into your own brand that's been able, quite frankly, you just seem a little bit above the fray?
Well, I mean, part of it is, you know, you have your kitchen cabinet in life, right? And so your family's part of that. But my macro kitchen cabinet, right, guys like Paul Jones and Louis Bacon and Stan Druckenmiller, it would just be embarrassing to not be truthful, right? Like you got to kind of call a spade a spade in some ways. And because I grew up as a macro trader and in that community, it's my fantasy football league. It's guys I speak to every day, at least one of them every day. They help hold you to integrity, right? The people you surround yourself with in life are the people that hold you to integrity. I mean, you'd like to think it's all internal, but it's also that external, like who's your community that you don't want to disappoint. And I think that's important, like who you surround yourself with in life. And so, listen, I've spent a bunch of time with Michael Saylor. The thing I'd say about him is he believes everything he says, which agreed.
Sometimes I'm like, Michael, that sounds insane, but he literally, you know, he might be wrong, but I don't think he's a fraud, right? And I think, listen, he did a lot of good things in pulling Bitcoin in, and now it's, you know, one of the weights on Bitcoin is he's got this, he put too much leverage onto a big pile of coins, and he's got to dig himself out of this overleveraged position.
When you speak with him, Mike, because that's the real problem, and it's a problem that we all knew and could have predicted would have happened. And we had him on the show, and we were like, 'What happens if it goes down? What happens to your position?' And he said something to the effect of like, 'Well, what happens if a meteor strikes tomorrow?' Which to me was like just a total false equivalence. Now he's in that position. Like, does he acknowledge the point that you're making?
To be fair, and you can call me a wimp, I haven't had a really hard conversation with him post this. The last time, you know, I saw him at length was a year ago summer when it was all working well. And I did say, 'Michael, I'm skeptical.' He believed he was going to buy so much Bitcoin there was no way it could go down. I like that, that's just, it's a tautology that doesn't work with me. And you know, he also had this fascination with tapping into the fixed income markets, right? The fixed income markets are two and a half, three times the size of the equity markets in the world. And so creating a fixed income product, which he did with his, you know, perpetual... I mean, the crazy part is not that he would do it, because it would really tarnish his brand. If you read the contracts on these, you know, STRC, paying the dividend is optional. I mean, it really is equity. He can turn the dividend off legally and just like tough luck. And he can turn it back on when he wants to. It doesn't accumulate. And so, you know, he was very thoughtful on how he structured this stuff. It just is not thoughtful enough because once you do that, then the game's over. And now he's got a big burden to carry. Unless, listen, what could get Bitcoin going higher again? You saw the CPI number today. You know, Kevin Warsh breathed a huge sigh of relief. I don't think Kevin hikes rates at this next meeting, and he probably does it in the fall if, you know, inflation stays sanguine. But if you flip to where he's cutting and you get Clarity passed, and, you know, the Chinese are big players in this, and I never believed in the four-year cycle, but everyone else did, and the Chinese certainly do, and that cycle kind of kicks back off in October of this year. And so you could, but you can make a narrative where the buyers come back in and you get a story again. I don't see a lot of energy in the space. You know, my hedge fund guys used to call me every day. Now they call me once every two weeks about crypto. They call about other stuff. You know, it's just not as exciting of a space. And so all the crypto businesses are kind of battening down the hatches. And we do see what's coming, right? I mean, XYZ is doing a trillion dollars of volume. Like that business didn't exist. Hyperliquid, who created a token where it feels like an equity, right? As it does better, the price goes up. And so the future is kind of out there, but we haven't seen it yet.
We'll be right back after the break. And if you're enjoying the show so far, send it to a friend and please follow us on YouTube, Spotify, or wherever you get your podcasts.
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We're back with Prof G Markets. I think that Saylor has really become the face of the industry, and when he goes out and he says he's selling and then does sell, I mean, that's a real problem for the industry. But then on the other side, I would say that Trump's involvement, I mean, the fact that we just learned that he earned $1.4 billion from crypto last year. He outearned every crypto company in America. He earned more on crypto than Coinbase earned last year. It's just unbelievable. How much do you blame it on him?
It's so interesting. It's a double-edged sword. Like Gensler and the Democrats were terrible on crypto. And as a Democrat, I was like, this is almost not American, like what they were doing. And Trump ran on, 'I'm going to take care of crypto.' And he did. So that initial surge was, 'Okay, we've got an SEC and a CFTC that are going to be very crypto positive.' And quite frankly, to be fair to the head of the SEC, he said, have you ever talked to him right before the inauguration, he said, 'Until there are rules, I'm not going to enforce the rules.' Like, 'I'm not going to enforce non-rules.' And so, in essence, he said, 'Go for it until the Clarity Act passes.' And people did. And so companies like, quite frankly, Hyperliquid and XYZ, right, non-KYC companies are growing and thriving, not thinking they're going to have, you know, the same thing that CZ or Arthur Hayes did, right? The long arm of US law getting them even if they're not US companies. I think what Trump also, and listen, Paul Atkins telling me this, he said, 'Listen, I'm all about disclosure. If it's disclosed, buyer beware, right?' That's a big boy's Republican idea, right? Democrats want to protect the consumer. Buyer beware. All of these Trump coins, Wilfie, the meme coin, if you read the freaking tiny fine print, it says, 'Oh, it's not, he made all his money from selling the coins. Every transaction, they got a marketing fee.' And so it's all in the freaking fine print. And it's like, oh my goodness. The question is, who reads the fine print?
Yeah. So, like, they made $600 million off Trumpcoin when it went straight down.
And then there's also people that sold the coins. And so I listen, it doesn't help at all. Like this Clarity Act, if it doesn't pass, it's going to stumble because of the ethics piece, because even Republicans are saying we need some... That's like, it's hard for Republicans. They're running on this thing that looks more and more corrupt. And people are like, and I go down to DC at least once a month now.
I'm like, guys, look past it. It's what's good for the country, what's good for the industry. Give clear rules. That's good for any industry. And there were plenty of legal ways to go after a president who's doing bad things, right? From the emoluments clause to just you're not allowed to insider trade. Like, we have a Department of Justice who has decided not to pursue cases against what normal Departments of Justice would pursue. And so I argue that why should crypto have a special set of rules, right? You can look at the same thing with the rare earths, the Kazakhstan deal. I mean, there are plenty of deals that don't feel up and up. But the bulk was crypto of the wealth, and so that's become a real political hot potato.
So what you said before, that kind of crypto is a story. If you have an asset that doesn't produce underlying cash flows, doesn't have hard assets, then it is sort of, it feels like an empty vessel that is filled with a story or a narrative. And that describes a lot of stocks right now. And the word we use is meme, right? Do you think that the energy, and I like the way you described it, there's just more energy elsewhere. Do you think the story shifting to SpaceX and AI, do you think a lot of that mentality that got stalled, of the kind of person that was buying crypto, is now quite frankly more interested in trading, you know, zero-day options on SpaceX right now?
We see it 100%. That's, it's so interesting because you could even in non-crypto people. So 100% within crypto people, and I talked to those two big Chinese firms I was telling you about, they were like, they're dying to get into the tokenized equity game because their customers want it. Like, people want to go where the heat is. But even in bigger macro, right, because Trump came out at the beginning and started down, you know, bashing the dollar, really, right? I don't want to be part of the international community, you know, like they wanted a weak dollar. Now, Bessent's changed that a little bit, but the early story was screw Canada, screw, we're going to take out, you know, Greenland. And this idea of where should you, if you inherit $10 million, at like what's the safe place to be? Was it in the dollar? Was it, so everyone went gold and silver. Then gold and silver have had a huge move and it's a bubble. It was Bitcoin and then gold and silver and then Korean stocks. And so moving the hot potato of where to stay ahead of your neighbor, because remember wealth is all about am I richer than you, right? It's not an absolute number. It's a relative number. And so I think being a wealth manager has gotten so much more complicated because you have these hypervalued places which are exaggerated by all the leverage. I mean, right now in the US equity market, we have never ever had as much leverage in global markets. This is, we're one of one here. We're above 29. We're above 07. We're above 99. And so it's a very dangerous place to be.
