Investment legend Michael Novogratz, the $3.2 billion investor and former manager of the multi-billion dollar investment firm Fortress, recently stated that the cryptocurrency market will be worth $5 trillion by 2022.
Over the past two years, Novogratz has expressed his optimism towards cryptocurrencies such as Bitcoin and Ethereum that have been leading the $100 billion cryptocurrency market. Bitcoin has transformed into a global phenomenon within a period of years due to its decentralized and transparent nature which have made it an efficient digital currency and safe haven asset for the vast majority of users, traders and investors.
Other successful cryptocurrencies such as Ethereum, Litecoin and Ethereum Classic have gained interest from both individual and institutional investors with their distinctive strategies, philosophies, monetary policies and purpose.
Ethereum provides an infrastructure for decentralized autonomous organizations (DAOs) and decentralized applications (DApps), creating an intermediary-free network of applications whereas Ethereum Classic is more similar to Bitcoin in the sense that it has a fixed and deflationary monetary supply. Novogratz explained that there exists no reason why the cryptocurrency market can’t be worth $5 trillion within the next five years.
“There’s so much human capital and real money being poured into the space and we’re at the takeoff point,” said Novogratz.
During an interview with Bloomberg, Novogratz further emphasized that a rigid regulatory structure within the global cryptocurrency exchange market is absolutely necessary for the cryptocurrency market to evolve into a major financial market.
Already, overseas markets including Japan, China, South Korea, Australia, the Philippines, Singapore and Hong Kong have regulated the cryptocurrency exchange market and have provided thorough, practical and efficient regulatory frameworks to attract the general public into the cryptocurrency exchange market. China, in particular, is heavily involved in its local cryptocurrency market and is actually planning to regulate smaller markets such as the initial coin offering (ICO) market that has gained increasing interest from investors since the beginning of 2017.
As Ari Paul, portfolio manager for the University of Chicago’s $7.5 billion endowment, explains, most cryptocurrencies that are in existence are likely to decline in value while several major cryptocurrencies such as Bitcoin, Ethereum, Litecoin survive.
“Most cryptos, like most companies, will eventually be worth zero. This is the nature of competition. Buy and hold is a strategy, not safety,” said Paul.
All Bitcoin has to do to become the premier store of value is survive.