Mike Novogratz has said he thinks Mark Cuban is making a “mistake” in letting Dallas Mavericks fans pay for tickets and merchandise in Dogecoin, calling it a “joke” currency.
The Galaxy Digital boss told Bloomberg TV bitcoin is where the action is, saying banks are “frantically” trying to get into the world’s biggest cryptocurrency, and that it could jump to $500,000 by replacing gold as investors’ favored hedging asset.
Mavericks owner Cuban said on Thursday he was taking the “fun” decision to let the NBA team start accepting Dogecoin, the meme cryptocurrency that started as a joke, but has a market capitalization of more than $6.4 billion.
Novogratz criticized the move, saying: “I think Mark’s making a mistake there. He’d be better off with 15 other ways to pay for his tickets.”
He raised concerns that young investors would get hurt by piling into Dogecoin. “Let’s put people in the safest, best stuff, not, you know, these joke coins,” he said.
Novogratz said he thinks bitcoin can soar to $500,000 in the future thanks to a “paradigm shift”, with banks “frantically trying to figure out how to get into crypto.” He cited interest from JPMorgan, which has supported customers investing, and Goldman Sachs, which has reopened a crypto desk.
The Galaxy boss, who is himself a major investor in bitcoin, said it is increasingly being seen as “digital gold” – in the sense that investors want to hold it as a store of value when they expect inflation. He said it is now an “institutional” asset class.
“We are in the middle of a paradigm shift,” he said. “And so bitcoin is wildly outperforming gold even though they’re both hedging the same thing. It’s outperforming because we’re in this once-in-a-generational adoption of crypto.”
Bitcoin was down 4% on Friday to $47,280, more than $10,000 off February’s all-time high. But Novogratz said investors need some “perspective”, flagging bitcoin is up around 60% on the year, while the S&P 500 index is flat.
Many seasoned investors are highly skeptical about bitcoin, however, and are expecting it to plunge again as it did in 2017. They argue it serves little purpose, as it is too volatile to be used as a currency.
In January, Elliott Management boss Paul Singer told clients in a letter reported by Bloomberg he thought bitcoin would eventually falter, bringing about a “we told you so” moment for him and colleagues.