Mike Novogratz: The Correlation Between Bitcoin and Stocks Will Soon Vanish


Early May bore witness to a rather devastating string of losses for bitcoin, the world’s number one digital currency by market cap. The currency – which had briefly traded in the high $40,000 range just a month before – experienced many dips that saw it trading in the high $30,000 range (about $10,000 less than where it had been in April) before hitting another big barricade that saw it drop briefly below $35,000 on or around May 6 of this year.

Mike Novogratz on Bitcoin: It Will Mature

The fall accompanied a major stock selloff that saw the NASDAQ trading at its lowest point in about two years. Not since the early days of the coronavirus have the U.S. financial markets been in such dire straits. The news suggests that while many analysts choose to believe there is no correlation between stocks and bitcoin, the opposite is being proven true.

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Mike Novogratz – a billionaire investor, bitcoin bull, and the CEO of Galaxy Digital – commented in an interview that he believes this correlation will eventually break down over time as bitcoin becomes more mature and comes into itself more. He says:

That correlation will, over time, break down. You’ve already seen the beta breakdown, i.e. [if] the Nasdaq falls three percent, crypto doesn’t fall nine percent like it would have last year, but I do think there’s more pain to come… What’s different from 2008, different from 2001, different from the COVID crisis, is the cavalry isn’t here. There’s no giant injection of liquidity to create the V-shape. We’re going to go down, and then we’re going to grind until there’s a new story that shows up and then take back off again. It’s not going to be nearly as pleasant to plunge in and buy the low. If you did that after COVID, you looked like a hero eight weeks later. There’s not a lot of hero trades out there.

He points to a lot of good things happening in the crypto market as of late, a big one being that Fidelity is now allowing people to trade and invest in crypto through their 401Ks and retirement accounts. He commented that this is going to open many doors for people who would otherwise have never thought to diversify their portfolios with digital assets.

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In addition, he points to the many companies out there – such as Luna – that are now buying billions of dollars-worth of the digital asset. He says the currency continues to grow in popularity and suggests that this is just a minor setback.

So Many Companies Buying In

He commented:

It’s amazing how much institutional capital is starting to come into the place. Black Rock, Black Stone, Citadel, Apollo are all building major crypto efforts, and so it’s completely intuitive to me that there’s a backstop somewhere in crypto.

Tags: bitcoin, bitcoin price, Mike Novogratz


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