Novogratz Slams Dimon: Buy Bitcoin Because "We No Longer Trust Financial Institutions"

It must be a sign that cryptocurrencies are becoming mainstream when Bloomberg TV launches the first of a six-part series on this comparatively recent innovation. Setting the scene, Bloomberg replayed comments made in interviews from what it described as “Wall Street sceptics”, including (not surprisingly) JPMorgan Chase’s Jamie Dimon, Neil Dwane of Allianz Global Investors and Severin Cabannes, SocGen’s Deputy CEO. The vignettes were peppered with sound bites like “index of money laundering” and references to tulipmania, as well as the standard establishment narrative of “blockchain over Bitcoin”.

In the studio was high-profile crypto advocate, Mike Novogratz, of Galaxy Investment Partners, who is setting up a crypto investment fund (believed to be in the region of $500 million).

The Bloomberg reporters asked why he’s so bullish on the space when some of his peers, like Dimon et al, are the opposite.

You might have noticed all of those guys are over sixty and I’m not. There’s some truth to that. It’s very difficult for someone who didn’t grow up in a digital world to actually understand how we could be moving into a digital world.

We know Dwane and that’s a bit harsh. However, this was Novogratz’s take on why Bitcoin has value.

Bitcoin you can look at as digital gold. What is gold? Gold is precious metal. It could have been copper, there are lots of things on the periodic table, but way back people chose gold to have value. It has value solely because people say it has value. Bitcoin is built on an amazing technology, there’s limited supply of it, people are trusting it.

Probably the most insightful part of the interview was Novogratz’s explanation about the rationale behind the crypto revolution – which was the perfect retort to the likes of Jamie Dimon and SocGen’s Deputy CEO.

Remember, this whole revolution came out of a breakdown of trust. It came out of the ’08 financial crisis when people said we no longer trust financial institutions, we don’t trust governments and, in parts of the world, today still. If you’re in Venezuela, it’s really hard to trust the central bank, or in Zimbabwe. So, the decentralised revolution, which Bitcoin is really the poster child of, is a response to the breakdown in trust.

The number of people calling out Domon for his Bitcoin view is growing. Morgan Stanley's CEO, James Gorman, said that Dimon was wrong about Bitcoin while our favourite pushback (before Novogratz) was Macquarie's head of AsiaPac equity strategy, Viktor Shvets. In "Macquarie Lashes Out At Dimon: "Modern Finance", Not Bitcoin, Is The Real Fraud", we quoted Shvets.

When a number of financial executives recently described Bitcoin as a “fraud” akin to the tulip mania, it exhibited their apparent lack of appreciation of fundamental shifts that are altering global monetary and financial systems. If one describes Bitcoin as a fraud, how would one describe a ‘financial cloud’ that is at least 4x-5x larger than the underlying economies? It is unlikely that US$400 trillion+ of financial instruments circulating around the world would ever be repaid and most are now backed by assets that are already either worthless or are diminishing in value. How does one describe rates and  the yield curve that are either directly determined by CBs (BoJ or PBoC) or heavily influenced by them (Fed or ECB)?

Back to the Novogratz interview and the Bloomberg reporter asked “Is it an investment, or is it a trade?”, citing the theft of Tether tokens overnight and the knock-on effect on Bitcoin volatility.

“We are in the second or third inning of this revolution, so these are very young experiments. Each of these coins are individual eco systems, with their own use case. Bitcoin, the largest, is really the decentralised system of money, the decentralised system of the store of wealth. But there are thousands of coins, thirty or forty decent market cap coins that have their own system. Because prices have moved so far, like in anything, people are nervous so you made a whole lot of money and there’s news, you book your profits and get out.

This didn’t satisfy the Bloomberg anchor who pressed Novogratz “People lost millions of dollars they’re not going to get back. How does that not put the whole model into question?”

The total market cap of the crypto space is about a quarter of a trillion dollars and $30 million got hacked. So, it certainly gets people nervous. We spent a lot of time think about security of our coins, how to custody them, how to keep them safe. A few year ago, when I had a smaller amount invested, I spent a lot less time.

After the Tether hack, the Bitcoin price rebounded to a new all0time high.

The Bloomberg reporter noted that Etheruem reached about 35% of crypto market cap earlier this year, before drifting back to less than 20%, while Bitcoin is almost 60%. Novogratz sees Ethereum making a new high shortly.

While Ethereum really had an amazing run, from a dollar two years ago, up to $400 and Bitcoin stayed on the sidelines, then Bitcoin had a big move. I think right now, for first timers entering this market, I think Bitcoin is the name they’ve heard of and that’s really kind of driving that move. Just in the last few days, Ethereum has started to move, I think it’s going to put in a new high soon. There’s a lot of positive things happening in the Ethereum eco system.

Asked about his price projections for the two leading cryptos.

I think we end the year at $10,000 on Bitcoin, so that’s a decent move from here. I think we end the year at close to $500 on Ethereum.

Novogratz would not be drawn on the size of his crypto fund.

The SEC doesn’t allow us to talk about fund raising, so I’d get into big trouble. People have been interested and receptive.

Bloomberg asked him whether he’d made any bets on the recent plethora of ICOs?

Sure. We’ve been betting on lots of ICOs. I’ve got a bet on WAX which is coming up. It’s a token that’s going to try to decentralise the market place for “skins”, which are the clothing, shields, swords, helmets, which gamers buy to make their avatars look prettier.

This was too much for one of the Bloomberg reporters which, given Novogratz’s wry smile as he was saying it, was probably the point. He continued.

How about this. There are more people that buy and sell digital clothing than there are that buy and sell Bitcoin and the rest of the cryptocurrencies combined.

And to cries of “What?” from the Bloomberg reporters.

It is a giant market.

Still discombobulated by the size of the skins market, the Bloomberg anchors seemed satisfied that Novogratz had given them some punchy price forecasts. However, they should have pressed him a bit harder as he told Reuters TV a week ago that Bitcoin would hit $10,000 in 3-6 months and $20,000 by the end of 2018, when the crypto market in aggregate would be worth $1 trillion. So, apart from bringing forward his $10,000 forecast slightly, the price projections weren't that punchy. 


QueeroHedge QueeroHedge Tue, 11/21/2017 - 15:55 Permalink

And even now that zerohedge sees the forest for the trees and provides coverage not just from conflicted anti-crypto goldsellers, ih8obama and his band of merry losers still couldn't be fucked spending five minutes understanding crypto or allocating a small percentage of their wealth there to get in on the superprofits.  It is easier to fool someone than to convince them they have been fooled. 

In reply to by QueeroHedge

amadeus39 Erek Tue, 11/21/2017 - 16:26 Permalink

Au contrair. I 'm quite certain he got a lot of money, and with a lot of money you can get a lot of honey. The bastards got a nice head of hair too. Somebody shoot that putz. Nobody should be that lucky. At minimum he should be investigated for sexually abusing some bimbo. I'm sure he's guilty.  

In reply to by Erek

???ö? natxlaw Tue, 11/21/2017 - 15:22 Permalink

Litecoin should be a percentage of every portfolio.  Like ammo versus gold, you can actually use Litecoin when the time comes (anywhere in the world, without border confiscation).  And the time is coming for payment by smartphone since growth in smartphones is exponential.  Meanwhile Litecoin appreciates. Transaction fees are negligible to none.  The encryption algo is more robust than Bit**** (fill in the dots). There is no trademark dilution like Bit****.  All code development for Bit**** can be applied to Litecoin (same codebase).  Litecoin is the second longest running cryptocurrency after Bit**** (Google the "Lindy effect"). Litecoin will eventually have all the features of Ethereum (smart contracts) in a better implementation (no hacking).  The list goes on and on.

In reply to by natxlaw

???ö? Spaced Out Tue, 11/21/2017 - 15:41 Permalink

You will thank me Rothschild dude.  No shilling going on here.  Just sharing research and results.  Not a Reggie.  Just a rational investor.  Litecoin is NO ALTCOIN.  Stop the fud.  Be a nice person.  Cryptocurrency is unstoppable.  Litecoin works.  Others are a lot of pain.  Second oldest cryptocurrency.  Better track record than your handle.

In reply to by Spaced Out

rejected Tue, 11/21/2017 - 14:39 Permalink

It must be a sign that cryptocurrencies are becoming mainstream when Bloomberg TV launches the first of a six-part series on this comparatively recent innovation. Yea,,, Bloomberg never bullshits! 

lil dirtball bcking Tue, 11/21/2017 - 14:59 Permalink

Yessss ... git along little doggies! Buy the tasty BitCoin. It will only go up, up, up! That's right - down the cattle chute, er, blockchain ya go! Buy more, more, more! It has nothing - nothing - to do with the central banksters or any government on this planet! It was only created with you, little doggies, in mind. It's for your benefit. You will always - always - remain anonymous. You will never - never - be taxed on your, er, earnings! Did I mention it's not to be confused with any central bank or any of any central bank's schemes? Never! Buy more, more, more - tasty BitCoins! Everybody loves BitCoin. It's the best thing since paper m0ney! Did I mention it was created for your benefit? So you could become rich anonymously and never pay any taxes? The creators of BitCoin love you little doggies so much, why don't you buy some more? It will only ever go up, up, up! And! And! It has nothing - nothing - to do with the central banksters or any government on this planet! Just say 'no!' to bankster schemes for good - buy all the BitCoins! So good. So good for you. BitCoin loves you, anon. Love, love, love. All that digital anonymous goodness wrapped up in non-central bank encryption. So safe. So anonymous. Did I mention it's not to be confused with any central bank or any of any central bank's schemes? No! Never! Bad central banksters. Bad, bad, bad. BitCoin will slay the central banksters in their corner offices and cubicles! Central bansters hate BitCoin! Hate it! Buy more today, little doggies. Get in line, little doggies, get in line. No pushing or shoving! There's plenty of BitCoin for everyone. We're always making more. Plenty for you little doggies. Buy some non-central bankster scheming BitCoin today! Right now! So good!

In reply to by bcking

bcking lil dirtball Tue, 11/21/2017 - 15:11 Permalink

God you have no idea what you're talking about. If you'd had any foresight you would have bought when I did in 2012. But you're kinda thick-skulled. Did you buy a Terraminer ? I did. Did you have it paying you daily? No you didn't. But then again, you're kinda slow. Keep beating off to those gold and silver coins boy. I'm sure one day they'll make you rich! Anyway. Heading to the gym. Enjoy your "work" day. I don't miss that commute I used to have. Be sure to bow to your boss when you come back from lunch.

In reply to by lil dirtball

marysimmons lil dirtball Tue, 11/21/2017 - 15:12 Permalink

The Bloomberg reporterette has no clue what she's talking about, but her reference to the Tether "hack" is an issue of concern in the crypto space.  Probably wasn't a hack but collusion with Bitfinex, a Hong Kong exchange.  This video does a good job of explaining the issue from 10:00 - 18:00 - feed that exposed this -, I wouldn't bet against Bitcoin.

In reply to by lil dirtball

Catullus Tue, 11/21/2017 - 14:42 Permalink

Buttcoins can replace ACH and Swift payments. I don't recall trust being broken in the payment clearing systems in 2008.This is a triangulated argument. Just because JPM sucks and they're against Bitcoin and crypto doesn't validate anything for the cryptos. This guy is hoping for the greater fool for his buttcoins.

bcking Catullus Tue, 11/21/2017 - 15:02 Permalink

Someone was too stupid to see a great investment. What a dolt you are. If you only knew what you were talking about. You go enjoy your cubicle life and paying taxes like a good slave. I remember when some asshole like you said this to me in 2012. I bought a bitcoin mining rig. I'll let you guess what happened after that. Let's just say I have plenty of spare time to pursue my own interests. What a fool.

In reply to by Catullus

Antifaschistische Tue, 11/21/2017 - 14:43 Permalink

oh please...these guys worth hundreds of millions of dollars are just pumping their position."on the street", where I live...the crypto buyers could care less about "trusting" financial institutions or not.  They are just crypto collectors or miners counting their stash (IN $US DOLLARS) at the end of every day like a woman counts her designer purses and shoes.

Antifaschistische CJgipper Tue, 11/21/2017 - 17:01 Permalink

some certainly.  if you're buying any commodity to protect yourself from a long term currency devaluation, then "counting" your stack at the end of the day would be incredibly boring.   throw it in a box...bring it out in 30 years when you retire.   I only made that distinction because that is not why my friends are 'into' cryptos.  Maybe they are different. Their time horizon is not not looking decades ahead.  they are not hedging a currency deval or a financial meltdown.  They are not ZH'ers, libertarians, Ron Paul'ers, etc.  Just dudes on a treasure hunt....and I have nothing against treasure hunting.

In reply to by CJgipper

buzzsaw99 Tue, 11/21/2017 - 14:49 Permalink

i trust dimon more than i trust this bozo.  at least with jpm chase i know they are going to clip me for a buck here and there but that's about it.  i don't even understand bitcoin and i damn sure don't trust any of the bitcoin exchanges.  hell i'd rather hold stock in jpm itself rather than own bitcoin.