Michael Novogratz, founder and CEO of Galaxy Digital, states that crypto companies will remain linked to bitcoin's price for another three to four years. He highlights how revenue in asset management, staking, and trading directly correlates with digital asset values. Despite this dependence, Novogratz sees potential for diversification through infrastructure like data centers.
Michael Novogratz, the founder and chief executive of Galaxy Digital, recently explained why the cryptocurrency industry continues to hinge on bitcoin's performance. In an interview, he noted that even diversified crypto firms cannot yet escape market cycles, as most revenues tie directly to digital asset prices. "If Bitcoin falls 30%, your revenue falls 30%," Novogratz said, referring to businesses in asset management, staking, and trading where income is a percentage of underlying crypto values.
This connection persists even for firms holding no digital assets on their balance sheets. When token prices drop, staking rewards decrease, trading activity slows, and asset management fees fall with valuations. Novogratz contrasted this with traditional financial firms, which enjoy broader and more stable revenue streams.
To mitigate exposure, Galaxy Digital has expanded into data centers and infrastructure. Novogratz indicated that this segment now matches or exceeds the value of its crypto operations in terms of market capitalization. Because infrastructure operates on different cycles and requires distinct capital, the company is considering a potential split into separate businesses, though no final decision has been made.
Looking ahead, Novogratz remains optimistic. He anticipates easier monetary policy from the U.S. Federal Reserve, including rate cuts, which could weaken the dollar and bolster risk assets like crypto. Crypto has underperformed compared to gold and silver recently, but Novogratz believes this lag sets up a possible sharp upward move. "The painful trade may actually be crypto going higher, not lower," he remarked, adding that breaking above key levels could swiftly shift sentiment. For 2026, the outlook appears constructive, driven by growing investments in crypto infrastructure. Over time, as these areas scale and revenues diversify, the industry's reliance on bitcoin's price should diminish.
