Key Takeaways
- • Galaxy Digital is developing an educational course for financial advisers, built through a partnership with the educational arm of CAIS, a platform connecting institutional investors to alternative investments, with the course centered on bitcoin.
- • Founder Mike Novogratz says the initiative could help kick-start institutional bitcoin adoption and that the course reaches advisers who together control more than $1 trillion in wealth.
- • Galaxy lost $272.7 million in its first full year of operation and $97 million in Q4 2019, and cut its workforce by 15%.
- • Novogratz predicts a "big [institutional] take up in the next six to 24 months" and says Paul Tudor Jones has begun allocating bitcoin to his fund.
- • Novogratz concedes that if few hedge funds enter the space, "my company's going to suck."
Summary
Galaxy Digital is working on an educational course for financial advisers, a project founder Mike Novogratz told CoinDesk he hopes will help kick-start institutional use of bitcoin and turn around the asset manager's fortunes. The course follows a partnership announced earlier that week with the educational arm of CAIS, a financial product platform serving financial advisers, hedge funds and private equity firms. Galaxy will supply educational content on crypto, covering the broader digital asset space and emerging market infrastructure, though the focus will be bitcoin. Novogratz described the partnership as a "really sweet partnership," noting that CAIS helps Galaxy reach the wealth managers who control much of the country's wealth.
Galaxy's financial record has been weak. According to the report, the firm lost $272.7 million in its first full year of operation and failed to turn a profit since launch, losing $97 million in Q4 2019 despite a market rebound in summer 2019. Trading losses wiped out its other revenue streams, and a investment in the gaming token WAX cost the firm as much as $47 million. Galaxy cut its workforce by 15%, and the bank warned earlier in 2020 that the coronavirus outbreak would likely further hit revenue. Novogratz acknowledged that the institutional bridge strategy came too early, saying "the consumer business was the easier play."
Novogratz remains confident that institutions will arrive. He cited the Federal Reserve's quantitative easing, noting that in one week after the coronavirus crisis began the Fed did more QE than in the entire 2008-2009 episode, and framed bitcoin as a macro hedge and digital gold uncorrelated with traditional markets. He said Paul Tudor Jones has begun allocating bitcoin to his fund. CoinDesk reported that a Fidelity survey found 80% of those surveyed found the asset class appealing, and that Coinbase, Gemini and BitGo were racing to launch institutional prime brokerages. Matt Brown, founder and CEO of CAIS, said interest from the financial advisory community in learning about bitcoin and blockchain has been increasing.
Novogratz said much of the course content had been developed over the previous three years but had gone unused because institutions were not interested until recently. He framed the course as a way to "sell the story" and get institutional investors comfortable with the asset. Asked what happens if institutional adoption fails, he said: "If very few hedge funds get into the space, then my company's going to suck." He added that Galaxy could continue investing and trading crypto, but its core aim is building connectivity to institutions.
Galaxy's financial record has been weak. According to the report, the firm lost $272.7 million in its first full year of operation and failed to turn a profit since launch, losing $97 million in Q4 2019 despite a market rebound in summer 2019. Trading losses wiped out its other revenue streams, and a investment in the gaming token WAX cost the firm as much as $47 million. Galaxy cut its workforce by 15%, and the bank warned earlier in 2020 that the coronavirus outbreak would likely further hit revenue. Novogratz acknowledged that the institutional bridge strategy came too early, saying "the consumer business was the easier play."
Novogratz remains confident that institutions will arrive. He cited the Federal Reserve's quantitative easing, noting that in one week after the coronavirus crisis began the Fed did more QE than in the entire 2008-2009 episode, and framed bitcoin as a macro hedge and digital gold uncorrelated with traditional markets. He said Paul Tudor Jones has begun allocating bitcoin to his fund. CoinDesk reported that a Fidelity survey found 80% of those surveyed found the asset class appealing, and that Coinbase, Gemini and BitGo were racing to launch institutional prime brokerages. Matt Brown, founder and CEO of CAIS, said interest from the financial advisory community in learning about bitcoin and blockchain has been increasing.
Novogratz said much of the course content had been developed over the previous three years but had gone unused because institutions were not interested until recently. He framed the course as a way to "sell the story" and get institutional investors comfortable with the asset. Asked what happens if institutional adoption fails, he said: "If very few hedge funds get into the space, then my company's going to suck." He added that Galaxy could continue investing and trading crypto, but its core aim is building connectivity to institutions.
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