Galaxy Digital founder Mike Novogratz has told investors that 2024 will be led by institutional adoption of cryptocurrencies, which will be driven by the pending approval of bitcoin (btc) spot exchange-traded funds (ETFs).
During Galaxy Digital’s third quarter earnings call On Nov. 9, Novogratz highlighted the firm’s belief that approving multiple ETFs “is now not a question of if, but when.” The fund manager filed its bitcoin and Ether (eth) spot ETF applications with the U.S. Securities and Exchange Commission in partnership with Invesco in the third quarter of 2023.
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Investor sentiment turned bullish in November 2023, with leading ETF research analysts predicting that the SEC will have approved 12 major bitcoin spot ETF applications by January 2024.
“2024 will literally be a year of institutional adoption, primarily through the bitcoin ETF, to be followed by an ethereum ETF,” Novogratz said during the third-quarter earnings conference call.
“As institutions get more comfortable, if the government gives its seal of approval that bitcoin exists, you’ll see the rest of the allocators start to look at things outside of that. And so, money will flow into space.”
Novogratz added that institutional investment could reach a tipping point in 2025 as investments “in tokenization and wallets” increase. The Galaxy Digital CEO added that a key focus for the US landscape should be ensuring that dollar-backed stablecoins remain a central cog in the broader cryptocurrency ecosystem.
“We are going to continue dominating the dollar. “We better have a dollar-backed stablecoin that reflects our values and is adopted around the world.”
According to Novogratz, a bitcoin ETF will bring some institutional confidence and a significant amount of funding to the cryptocurrency space.
“This ETF is giving us all a break, breathing life into the system. That provides capital that allows the rest of the things to flourish. But I think if you look at the long-term crypto plan, it is on target,” he added.
The possible influence of an Ether spot ETF was also mentioned during the investor call. The CEO of Galaxy Digital said that its potential approval might not be as well received as that of a bitcoin ETF, given that ethereum‘s validation model is based on a staking and staking returns model.
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“Unless they can find an ETF that actually passes through staking rewards, it’s going to be a mediocre product than just owning ethereum with someone like us and having it staked,” Novogratz explained.
He added that the technical difference would be significant if investors were looking for returns between 4% and 7%, depending on the staking method. Utility remains an important factor, and Novogratz emphasizes that different blockchains and their native tokens must “serve a purpose” and have “things built on top of them” to maintain long-term value.
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