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Novogratz, ex-hedge fund manager says Bitcoin has become less-risky

Photo of: Sangeetha Golchha
by Sangeetha Golchha

Ever since Bitcoin saw its launch in 2009, it has been riding a roller coaster ride. It has experienced a situation where it has risen like a phoenix as well as shown its vulnerable state of falling apart also. The year 2020 saw Bitcoin go through both the roles but in the end, and 11 years later, Bitcoin is getting a lot of attention not just from individuals but also from institutional investors.

Mainstream players like Microstrategy and Square have recently announced their decision to invest large sums of money into the asset. This investment has spearheaded a new thought process related to Bitcoin – a normalized version of a viable investment option. Mike Novogratz, CEO of Digital Galaxy in his tweet has said that Bitcoin is now an obvious financial play. His tweet further said:

“On a risk-adjusted basis, BTC is an easier bet today than it has ever been. It’s being de-risked daily.”

Source: Twitter

Marcel Pechman, a market contributor when asked to give his stand on the Tweet by Mike, said:

“Adjusted by its volatility, Bitcoin has presented the best return in one or two years against all other asset classes. Few investors expect gold to rally 60%, but it never went below -8% so the Sharpe index adjusts returns based on volatility.”

We all heard how Microstrategy bought $400 million worth of BTC in the recent months to its kitty of assets, but it is not the only one. Square, a concern headed by the Twitter head and CEO Jack Dorsey also purchased $50 million of Bitcoin recently. Even Paul Tudor Jones, the billionaire investor disclosed his May 2020 holdings of Bitcoin and even compared the asset to an investment in Apple before its boom.

Now that Bitcoin has entered the official mainstream traditional stream, there are many conventional products which are now designed and built around it. Bitcoin stands in a comfortable position to gain financial exposure today than it was years ago. Earlier apart from being viewed as a vulnerable asset and an alternative form of currency, Bitcoin now has gained a lot of prominences and is seen as a store of value and investment options in the recent past. In an interview with Bloomberg TV Posted on October 23, Mike Novogratz said:

“I don’t think Bitcoin is going to be used as a transactional currency any time in the next five years. Bitcoin is being used as a store of value,” he added. “People are worried that the central banks around the world are debasing fiat currencies.”

Take the case of the US government which printed a lot of currency to provide liquidity in the pandemic era, but as a result of this move, its own American dollar devalued. 

Bitcoin has been at the receiving end of a lot of flak owing to its highly volatile nature. But 2020 in a way has been a turning point for Bitcoin because there has been a perception turnaround in the minds of investors towards Bitcoin.