Welcome to Galaxy Brains. An infinite amount of cash cash. I'm your host, Alex Thornne. The US banking system is sound and resilient. Bitcoin made a new all-time high.
If you're not long, if you're not long, you're short.
Satoshi's going to come on there, laugh hysterically, go quiet. Oh, Bitcoin's going to be erased.
Bitcoin. Bitcoin is the best crypto.
Bitcoin is going to zero.
Welcome back to Galaxy Brains. As always, I'm your host, Alex Thornne, head of firmwide research at Galaxy. Bitcoin, not zero. We have a great episode for you. Mike Novogratz, CEO and founder of Galaxy joins us. Plus, we talk with Mike about AI, markets, unemployment, monetary debasement, the prospects for Bitcoin, the story for other blockchains and tokenization and real world assets, what he expects for next year, and a couple New Year's resolutions, who's on the naughty and nice list, because I should say, merry Christmas. If you're watching this right when this episode comes out, it is Christmas in the United States and around the world. I think we recorded this about a week before Christmas. But I wanted to wish everybody a happy holiday season no matter what you celebrate and a happy new year. Before we get to this great interview with Mike, I need to remind you to please refer to the link to disclaimer in the podcast notes. And note that none of the information in this podcast constitutes investment advice or an offer recommendation or solicitation by Galaxy or any of its affiliates to buy or sell any securities. What a year. 2025 is wrapped. It's in the books. Bitcoin finished down on the year, unless something crazy changes between now and January 1st. But the foundation for a future of higher prices and better value, I think surely was laid in 25, whether it's the regulatory clarity and shift in Bitcoin and crypto's favor or the maturation of the institutional market infrastructure. So I think it's safe to say good things are coming in the future for Bitcoin. And I want to also wish everybody a happy new year because we will not be here next week. We're taking a week off. This is going to be, I think, our 205th episode. 200 plus episodes of Galaxy Brains. And whether you joined us for every single one or if this is your first time, thank you for listening. And let's hop right into it with Mike Novogratz. Mike Novogratz, CEO, founder of Galaxy Digital. Thank you for coming on Galaxy Brains.
You know, my first Christmas podcast. This is coming out. If you're listening to this the day it comes out, merry Christmas. It is Christmas and here's Santa, St. Nicholas.
Well, certainly we're hoping St. Nicholas, you know, with this, we're like 10 days pre-Christmas, that he changes the trajectory of Bitcoin and other cryptos because right now it feels like a damn lump of coal.
It really does, right? It feels like... That's such a good clip. Clip it, Phineas. That's such a good clip. Yeah, we did not have a Bitcoin Santa Claus rally. Frankly, the opposite, right? I mean, your prediction is looking pretty horrible at this point.
I know. And people called me bearish for lowering to 120.
Can you just look at the market technically for a second? 100 was a giant level to break and there was a tremendous amount of buying done above 100. And so 100 is now the ceiling. And we will break it at one point. I fundamentally don't think we've seen the high in Bitcoin in our lifetimes. Therefore, we'll break 100 at one point. But until we do, we're in a bear market.
And I would like to think it's an 80 to 100 market. It might be a 75 to 100 market. What's my optimism? Where does it come from? When it comes, I think we're going to get a new Fed chair in the next few weeks. He's going to be dovish. I think you're only priced in two Fed cuts next year. I think you're going to get more than that. I think you're going to take rates to two and a half percent pretty quick. Mostly because both candidates are worried about jobs. Kevin Worsh and Kevin Hassett. AI is eating jobs. And if that story actually keeps playing out, you're going to see them cut rates. And more importantly, you're going to see the Fed find lots of ways to inject liquidity into the system. And they've already started doing that. They're buying treasury bills. I saw that the SLR they're moving.
That's always harder to get done around year end because year end periods where liquidity is really tight. Everyone's trying to clean up their balance sheet. And so I think you'll see post year end a wash of liquidity and maybe that's the story. Plus there's categoric bearishness on crypto right now. Other than your 120 prediction which is so off, you know people are going to throw tomatoes at you on Christmas. There's a lot of bearishness so you could see paradoxically a real shift. Dollar off, gold and silver on a freaking heater right now. Silver is the lead horse in this race right now. But when I think about macro trades for next year, it's a lot of the same ones. It's the steepener, it's gold and silver, it's copper. Bitcoin could join that crowd mode. So that's what we'll see. If it doesn't, it's going to suck.
Yeah. I mean, last year in 24, Bitcoin ranged between 40 and 60 for like 270 days. Something, you know, people are asking like, what's the bullish catalyst? What's how or how low will we go? And I also think a third option that people are sort of forgetting is just chop for months.
Yeah, we could have chopped.
Right? I mean, we did last year. Today we were sitting here at 86,500 and then about 30 minutes later it's 90, 90,000, 90,500. I was like what happened? No one knows.
I was like we're supposed to have a really good firm to understand what's happening and it was...
We're in a very illiquid period right now and so one big flow can drive the market and then there's short covering and then it rolled right back over with the NASDAQ. So the big risk to Bitcoin and it's a big risk to all the crypto is that there is a scenario where the NASDAQ shits its pants and we really have an unwinding of some of this exuberance around AI. Any damage to XAI, you know, to...
Open AI. Yeah. Sam Altman is the lynchpin of so much of this and if it becomes clear that he's getting whooped by Gemini or if he has a harder time, he's got a lot of capital he needs to raise to fund all this expansion and that whole data center to chip the hyperscaler supply chain or stack. Listen, I'm still pretty optimistic that people need a lot of power. You saw a deal today with HUD 8, spectacular deal for them. Google Anthropic paying up a lot for 2027 power.
And so, you know, we got mixed signals, but there's a lot of credit risk out there. And today, the stock market is down. If the NASDAQ picks up steam to the downside, crypto's not going to go higher. It might go sideways. It probably goes lower.
Yeah. It's hard to imagine a world where Bitcoin performs really well while stocks are down a lot. I mean, I think this is one of the...
We'd love to see that decoupling.
Well, I think that's what I was going to ask about because in September, sorry, in April, we had the tariff tantrum. S&P was down a lot. Bitcoin obviously was down a lot. I think it was the first time the S&P corrected 10% or more out of like the last 12, and go back further than that, but that the dollar depreciated on the unwind rather than appreciated.
People were looking for non-dollar denominated hedging assets. Surely Bitcoin might eventually certainly find its footing there.
You know, sell the dollar, buy the euro, buy the Mexican currency, the carry currency. Maybe Bitcoin. I mean, we'll see. And it doesn't take a lot. It just takes some flow to start. Right now, the buyer of Bitcoin, there's some sovereigns that'll buy. Really it's US wealth and they just started. You have a lot of the big banks just finally said, oh, you can let your registered investment advisors sell Bitcoin. And so I think it's going to happen. There's $4 trillion of money managed for baby boomers in US wealth. If you get a 3% allocation, that's a trillion and a half dollars. That would make the price a lot higher. And so again, I'm not... I'd be really nervous if I thought 129 was the high we'd ever going to see. I don't think that's the case. And so now it's just managing this range until we get a new catalyst to take.
Yeah, it does feel like 26 is shaping up to be very chaotic in investing, right? Like there's a lot of questions. You step back and get out of macro for a second. It is chaotic in macro and you think about crypto. 2026 is going to be an amazingly important year because it's the year where we're moving away from crypto to using the same rails for real world assets. And that's not going to happen fast, right? We're going to tokenize Galaxy. We have tokenized it on Superstate and hopefully soon we're going to take that little token and throw it into the wilderness and it's going to trade on Radium and Uniswap and all these DeFi platforms. And all of a sudden, people, wait a minute, tokenized equities will be a thing. Sometime between now and the end of next year, tokenized equities are going to be a real thing. And I think what you're going to see is they're going to get the big brands in the US because people want brands. So if it's Apple or Tesla or SpaceX or Galaxy, they are going to get tokenized and they're going to get sold to places in Peru and Paraguay, in Indonesia, in Cambodia, in Nigeria, right? It's the rest of world that needs banking in a wallet. We're mostly okay here in the US in the scheme of things.
You know, I got Robin Hood. Buy stocks in like one second.
You can buy on the Galaxy One app. You can buy stocks. And so our access to great financial products is pretty good in the US. And so crypto's first base use case is rest of the world. It's banking the unbanked. It's not just banking the unbanked. It's giving financial services and products to the unbanked. Like I want a new mission statement of Galaxy. Maybe I'll think, the rest of the management committee is going to shoot me because I haven't even told them. It really is we want to help people increase their wealth. So if you're in the Galaxy One wallet at the end of the year, I want it to be higher than it was at the beginning of the year. And so that is giving them access to product, but it's also giving them advice on what to buy and how to buy it, when to buy it. As opposed to being a broker that's just buying and selling. I want our clients to get wealthier because then you feel like you're doing something good for society.
So that's going to be my new mission. Yeah, I love your point about this in 26 about real world assets because crypto's been this story of creation and destruction over these many years that we've been involved, right? Like you had the ICO, powerful idea, democratizing fundraising, but also created a lot of destruction in that only a few actually raised money and made it through and did great. We had a lot of products were awesome, but giant bubble, memecoin sort of a reaction to that also. But the way I think of it is through all of those creative destruction cycles the infrastructure got built and it's really good infrastructure. So now the challenge to me is can we get some good assets on these things?
So you're going to get good assets, you're going to get tokenized real world assets and you're going to get good tokens.
I keep pointing to Hyperliquid. Full disclosure, I own some, a lot. It's a good token. It's a blockchain, but mostly it's an exchange and they take the profits, 98% of the profits they make on the exchange and they burn their tokens. And so I'm not saying it's an equity, but it is easy to value and it feels like equity.
Yeah. More like a business.
Like a business. And so I think that's the future of tokens. I think you're going to see good tokens trade well just like good real world assets and you're going to see community-based tokens which was all crypto had slowly bleed out with the exception I think of Bitcoin.
Now Ethereum, Solana, big blockchains that people are going to build on top of, they have their value because of community.
But man, they better walk that work, that narrative. They really got to have working on it to keep that narrative of why they're important tokens.
Because the moment you're not money, Bitcoin is money. Then you're just a business. The valuations are a lot lower. And so the questions will be can Ripple hold it together? Can Cardano hold it together? Like who became money and who were businesses that are going to now be valued at? Well, how much do you make me? And if they're not money and not a community, do they actually have a good business? And I think you're right.
Well, can you keep the community together when there's so many other options right?
That's really what it is.
Right, like Charles Hoskinson, bless his soul, he's kept the Cardano community with a blockchain that people don't really use a lot. I'm going to get tomatoes thrown at me for saying that, but he's had a strong community just like XRP. Can you keep it together when there are more and more options?
Yeah, and it's when I can buy SpaceX levered 40 times...
Yeah, it's kind of a put up or shut up moment for crypto, right? Like, you've made it through the regulatory attack. You've now got this institutional market structure foundation, but it's going to make this year complicated because that doesn't happen overnight. It's probably a one to three year process, not a one to three month process. And so, we're going to have this transformation of our industry. And even a galaxy like us, we're spending a lot of time, and I'm going to spend more time in January, literally mapping out where we think the world's going and what our place is. And I think every crypto company is doing that. You're going to see a lot of neobanks and crypto exchanges, crypto wallets are all going to become neobanks. Stablecoins, money market coins, tokenized equities, Bitcoin, other cryptos like that, everyone's going to try to build a similar business, which is let me give you a bank and a wallet.
Yeah. It's the great convergence.
Do you think that where do you think that lands? We're introducing some decentralization into the capital markets via crypto. Are we going to make the TradFi broker dealers and RIAs and whatnot more decentralized or are they going to make us more traditional?
It's a good question. I think it's going to be a little of both. Where it scares me a little bit is that this idea of things being decentralized and private is going to get demoted in terms of efficiency.
So you're worried we get a little...
Well, because listen, the suits get more control and that could kill the soul. I mean, look at Base as a blockchain. It's really convenient. It's part of Coinbase. It's not really a blockchain. It's a database.
Yeah. It's like a computer in their basement is the joke I always make.
Yeah. But most people are okay with that, right? And if the world becomes okay with that, well, that makes Ethereum less important. I like to think your data is powerful. Here's an analogy. When I first went to India, I waited like two hours in the customs line and I filled out these forms and some lady's out there and she's stamping and there were piles of paper all over this booth. There were literally thousands and thousands of pieces of paper and I thought that data is worthless. It's going to be toilet paper or a bonfire later on. No one's ever used that data. So, they couldn't use data. Now, you walk through customs and they just go like this. You don't even have to have a passport. Your face is your data and it gets filed and they can use it. They can track you. I was talking to the people in Abu Dhabi. It's shocking how well they do this. They have your Emirates ticket to your passport and they know what you spend. So they know on each flight, Emirates flights from Cambodia spend this much. Flights from New York spend this. The value of every passenger basically to their economy. So the data is so valuable, right? And so now that data is valuable, it's also powerful. Like in Europe and Canada, if you were a trucker during those COVID protests, you could get your bank account closed. If you were living in Kashmir, Modi erased 11 million people because he didn't like them. Like, man, that kind of sucks to be erased. And so I think having decentralized identity systems, decentralized blockchains, having some privacy, but also no one owning the data is really important.
But a lot of people don't agree with me.
In China, they don't agree or they don't have a choice. They've always said the collective is more important than the individual.
And so that battle or that debate is still to be determined.
Yeah. I think you're right to flag that principle is actually at risk with the great convergence, right? Can we bring that own your data, individual liberty...
Canton is a beautifully built blockchain. It's got lots of things. It's got a lot of the Wall Street guys on it. I don't think it'll trade great because it doesn't get distributed in the little guys. What creates value in blockchains is distribution, which creates value in blockchains, turning them into money, turning them into passion, community value blockchains. But it very well might be a very well-used blockchain that just functions as a great semi-centralized database.
Yeah, it's interesting your point though. The complacency around what was originally like Satoshi's one of his main goals was decentralization, a distributed peer-to-peer electronic cash system, right? And we're saying, well, let's make it...
If you want to get your revolutionary juices back, you got to just go out to my buddy Joe Lubin for another cocktail because he's a firm believer in how important it is to have a Satoshi-like system.
But we'll see. We'll see. I do think there are good policy reasons. You make a great case on the privacy of data, owning your data. Another one I think is credit risk, right? Like we have an enormous risk management team at Galaxy and they're really good. And we do real-time monitoring of all the venues that Galaxy trades on and adjusts every time including the decentralized ones. And we actually give a higher rating in some instances when a system has no central point of control. It actually makes it more creditworthy in our mind, less risky. So there's a policy reason for wanting decentralization. I feel like we've got to tell that story to TradFi, to Wall Street, that sure we're going to wear suits a little bit more and join you guys, but you should take some of our things.
The one thing that everyone should take note of, right, you're down in DC right now discussing this market structure bill, which unfortunately got punted till January. One of the big issues is around DeFi. And lo and behold, guess who shows up? The king of basically the JP Morgan of our time, Ken Griffin.
He is fiercely smart, fiercely tough.
And he was like, 'No, no, that's unfair.'
I don't want DeFi. I like centralized exchanges because I own them all. I own the liquidity. I get the order flow. I don't want Hyperliquid. Hyperliquid is an anathema to Ken Griffin.
That's right. And so he's going to fight it.
And just like casinos and sports betting platforms, they kind of got caught flatfooted with prediction markets.
With prediction markets, but don't stop. Don't think they're not fighting. They're fighting at the state level. They're trying to change the rules federally. Because they say that's unfair.
I say, 'Well, tough luck.' It's how innovation happens.
That's right. God, I wish I was in those predictions. I mean the fact that they... it is quite a development.
Shout out to Kalshi and Polymarket. The fact that they got the CFTC on their side here too is...
Every once in a while something happens that doesn't make sense to your rational way of thinking, the way you've always been thinking, but it happens. You're like, 'Oh, there's new rules.' Let's pivot. We need to work hard at Galaxy to figure out our role in prediction markets. So, I mean, it would be crazy that our Galaxy One app doesn't have a prediction market portal. It will in time. I'm screaming like time should be yesterday, but it takes a while to build this in and we need to be market makers. We need to figure out all the ways we're going to participate.
And trust me, the elves are working on it.
But I think every shop like ours, and you've seen a lot of announcements already, is doing the same thing.
Yeah. It's a very old idea, right? What was it called in 17? Augur.
Augur was the first I remember.
Yeah. And it was such a good idea. Joey Krug. And it didn't work at the time though. But now it was sort of like gradually, Kalshi had one too. It was called Nosis.
Yes. And it was gradually nothing really happened. Good idea. Didn't really work. And then all of a sudden it was like bam. Right. Like kind of like last year's presidential election and those guys were ballsy. They were like, 'Screw it. We're doing it.'
