Michael Novogratz, founder and CEO of Galaxy Digital, a commercial bank focused on cryptocurrencies, details the most common and costly mistakes made by market traders today and highlights This shows his current lack of confidence in Bitcoin.
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Novogratz is a former partner of Goldman Sachs, and his early career was trading currencies and observing emerging markets.
Today, the Off the Chain podcast host and Bitcoin fan Anthony Pompliano spoke with him to discuss the chaos in the market and the Fed's unprecedented response to the economic impact.
But since Bitcoin and other cryptocurrencies are now following stocks and other assets, Pomp also wants to know what the biggest mistakes traders make and how to avoid them. Here is the reply from Novagratz:
1. The biggest mistake people make is that when the market crashes, everyone thinks it's time to return (but it's still early). Bad things are always worse than you think. I make this kind of mistake sometimes, but I will tell myself, "Hey, when you want to buy something, go for a walk, and then come back and check it out a week later," and it usually gets worse. Once it starts to deteriorate, the bad situation will last for a while;
2. Choose a story where fundamentals are improving-is the situation improving in the marginal zone, or is it worsening in the marginal zone? So, if you can see things getting better at the edges, this usually starts a cycle where things get better.
3. This doesn't mean you can't buy things that seem to be bad or you can't sell those things (goods) that are not so good, and what you really should try to do is: when you have this When thinking, buy things that you can save for a long time.
Novotgratz goes on to give an example of horse racing stocks-Churchill Downs (CHDN), owner of the Kentucky Derby (an annual horse race held at the Churchill Park Racecourse in Louisville, Kentucky, USA). "The company's stock has fallen from $ 160 to $ 80 over the past six weeks," he said.
Even if the Kentucky Derby is cancelled (they make $ 100 million in the Derby each year), it is still a company with a market value of $ 5 billion, and now has a market value of only half of the latter. You need a company like this to run; he says you can find value, even if the value goes up immediately, you don't need to sell it.
But what about Bitcoin? Novogratz said, "Unless you see deflation, I don't think Bitcoin will accelerate its development." He refers to Bitcoin's revolutionary halving mechanism, which will reduce the number of coins that can be generated over time. Bitcoin's next halving will happen after approximately 52 days.
Last week, when Bitcoin reached an annual low of $ 5,301, Novogratz posted on Twitter that confidence in cryptocurrencies had evaporated.
In fact, he tried to warn cryptocurrency investors that black swan events such as the corona virus crisis could be very bad for Bitcoin. On March 1, he tweeted that investors tended to liquidate all of their assets in such incidents.
In addition to Galaxy Digital, Novogratz also owns a private equity business. Pompliano asked which companies he was supporting, and Novogratz replied,
"We are always looking for" food "and people must continue to eat."