Mike Novogratz – Bitcoin Adoption Update (Bitcoin 2022 Conference)

‘This is a really powerful voting block, and it’s often a single-issue voting block. Don’t screw with my bitcoin and don’t screw with my crypto.’

Uncertainty about how cryptocurrency regulation will roll out in the future, particularly in the U.S., remains a significant barrier for wider adoption of digital assets such as bitcoin, which was set by panelists on Wednesday at one of the largest bitcoin conferences of the year. But speakers at the Bitcoin 2022 conference in Miami Beach were optimistic that more policymakers and regulators were seeking to better understand the technology and to support innovation in the sector. Consumers being able to pay for products and services with crypto is seen by many in the industry as a path to wider acceptance of digital currencies, but one major reason more merchants aren’t offering crypto as a payment method is regulatory uncertainty, according to a report presented at the conference by cloud based payments platform checkout.com 

The report, based on a survey of 3 000 businesses across 10 countries, mostly online marketplaces, financial technology, and e-commerce, said that regulatory uncertainty would endure as the creation of national legal frameworks for regulating crypto has been relatively slow and uneven. Mike Novogratz, chief executive of investment firm Galaxy Digital, said that the attitude in Washington regarding moves to crack down on cryptocurrency has begun to change.

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‘So I think the most important week in lots of  ways in crypto last year, was around the infrastructure bill, when the Biden administration – you try to sneak in a poison pill, or at least you know a get you sick pill – into that legislation and the crypto community mobilized. Remember, I was in the south of France on vacation, my only vacation, and I was on the phone with every senator I knew, but everyone was. More impressively, there was this retail ground swell. There were millions of phone calls placed to congressmen and senators, and DC was shocked. That was the wake-up call when they realized this is a really powerful voting block and it’s often a single-issue voting block. Don’t screw with my bitcoin. Don’t screw with my crypt though. You know, Elizabeth Warren, who has got a lot of clout with the Biden administration and is very close to the head of the SEC, had a lot of influence on how the Biden demonstration was thinking, and what is really interesting is that Janet Yellen and the president’s executive order really had a change in tone recently. It was a change in tone from being negative to being balanced. That’s politics. It’s not because they saw the light, it’s because they were like, “Wow, we need to pay attention’’, and there are two things that got him thinking right. This is about innovation, right, and it’s about the little guy. I think that narrative is changing in DC. I don’t see legislation showing up this year. The way politics is set up, we’re going to be in gridlock, but I think the chance of them doing really damaging things has gone way down.’

When we think about politicians, I think a lot of it is how they respond to the average citizen or people who have influence. One of the things that’s important about bitcoin is the narrative. What is the narrative of the moment? It brings in different groups of people based on what narrative is kind of popular at the moment. In America, We have 8% inflation, which is likely to rise when the March numbers come out. Is Bitcoin an inflation hedge? Is it a non-correlated asset? Is it a speculation tool? What is the narrative that you think is kind of resonating with the market today?

‘So, in my opinion, bitcoin is far more important outside of the United States than it is inside the United States. So the US dollar has been very stable against other currencies for a long period of time, and when you look at Lebanon, Russia, or Turkey, they haven’t been. But every macro investor, every common citizen can look at what we’re spending and realize that with debt to GDP at 140, it’s really hard to see solving that issue without inflating your way out, and now we’re seeing 8% inflation, and so it’s becoming part of a portfolio for institutions. And I think the narrative isn’t that we’re gonna replace the dollar with bitcoin. It’s not that I’m gonna buy these fancy shoes in bitcoin, it’s that I’m gonna take some of my wealth and preserve it and store it there as an asset. Right now, it’s still correlated to the NASDAQ that correlation is starting to break  down, right? It used to have a beta of four, now it’s got a beta of two. Why is it correlated? Because most people bought risk assets and bought bitcoin because the Fed was pumping in so much money? So what drove prices up? Inflation is driving both NASDAQ, right, stocks, believe it or not, are an inflation hedge, right? It’s hard to remember when stocks are at an inflation hedge. If you have hyper-hyper inflation, stocks go way up because they’re being repriced, and so there’s… there will… continue to be a correlation. It’ll break down some.’ 

Panelists also note the importance of regulators offering standards for custodians of cryptocurrency assets. The president of KOMAINU Holdings Limited, a custodian of digital assets, said that so far there hasn’t yet been a regulatory framework established for such issues as the entry of data and the segregation of fees. I think that, unfortunately, most of the regulators. They’re somewhat behind in getting to the point where they will actually create a standardization around this, Mr. Shah said.

Here at Savvy Finance, we believe that it’s just a matter of time before the full adoption of bitcoin and crypto in general. If you’re still saving money in the bank and not investing in crypto, today may be a good time to start investing in this digital asset that is gradually taking over the financial world.