Crypto’s Speculation Era May Be Ending, Says Galaxy CEO

Highlights:

• Galaxy CEO Mike Novogratz believes crypto’s era of high-risk speculation is nearing its end.
• He predicts tokenized real-world assets will replace big crypto gains with steadier returns.
• Novogratz sees crypto shifting from outsized rewards to reliable returns via real-world tokenization.

The cryptocurrency industry is entering a new phase. The chase for extreme profits is slowing down. Galaxy CEO Mike Novogratz explained at the CNBC Digital Finance Forum in New York that big institutions now shape the market. He said they prefer stability instead of risky trades. As a result, this shift shows the sector has grown and changed from its early years.

Retail Demand Slows After Major Market Shocks

Novogratz also noted that retail investors once joined crypto to seek huge returns. He explained that small investors usually do not enter the market for about 11% yearly gains. Instead, they tend to look for much bigger multiples. However, that strong desire for fast profits has weakened as large financial firms enter with different goals.

Meanwhile, the fall of FTX in 2022 became a key moment. Bitcoin dropped about 78% from $69,000 to $15,700 in November of that year. He described this event as a major loss of trust. Because of that shock, many investors still think more carefully about risk today.

Another major change hit the market on October 10, when a wave of liquidations swept across crypto. Mike Novogratz called it a major event that removed many retail traders and market makers. He said selling pressure rose even though no clear trigger appeared. Novogratz added that no obvious cause showed up this time, which left many people asking what really happened.

He said narratives often drive the crypto market. He explained that these stories take time to grow and attract users. However, once the market pushes many participants out, recovery takes time. Because of this, weak retail activity has slowed momentum.

He also said speculation will not disappear completely. However, he believes the market will shift its focus. “Crypto is all about narratives, it’s about stories. Those stories take a while to build, and you’re pulling people in … so when you wipe out a lot of those people, Humpty Dumpty doesn’t get put back together right away,” he added.

Tokenized Assets Could Lead Crypto’s Next Phase

Novogratz believes tokenized real-world assets will lead the next growth phase. He pointed to tokenized stocks as examples that could offer a different return style. This shift shows the market may move toward real use cases instead of pure speculation.

Chainlink co-founder Sergey Nazarov shared a similar view on Tuesday. He said tokenized real-world assets will likely surpass cryptocurrencies in total industry value. He also stated that this shift would fundamentally change what the crypto industry focuses on.

Novogratz also spoke about regulation. He said he feels confident that lawmakers will pass a crypto market structure bill. He shared that he recently spoke with Senate Minority Leader Chuck Schumer, who said they plan to pass the CLARITY Act. Novogratz added that both Democratic and Republican lawmakers support the bill, which could give the industry clearer rules.