Galaxy Digital CEO Mike Novogratz warns that financial markets are facing a significant shift, with investors flocking to traditional safe-haven assets like gold as the cryptocurrency market struggles to gain traction.
In an interview with CNBC, Novogratz highlighted how recent tariff increases have caught many off guard, sending shockwaves through the global economy. He linked these developments to broader geopolitical shifts, where the long-established global security and economic systems are undergoing a profound transformation.
Novogratz explained, “Trump’s statement that he wanted to change the game has created massive uncertainty,” noting that this disruption is being felt across all asset classes.
Crypto Demand Eases as Fear Drives Investors Toward Gold
The US stock market has experienced a nearly 10% drop this year, but Novogratz believes this is an underreaction. He points to fundamental changes reshaping the economic landscape, which has created a “risk-off” mentality among investors.
“Bitcoin struggles in times of fear,” Novogratz explained, emphasizing that the current climate is holding back new crypto adoption. “We’ve seen very few new buyers,” he added, suggesting the chaotic atmosphere is deterring fresh investments into digital assets. Meanwhile, gold prices have been rising, reflecting the broader investor anxiety. “Bitcoin and gold are both indicators of financial stewardship,” Novogratz noted. Rising gold prices signal declining trust in fiscal management, with foreign central banks increasing their gold holdings. He also speculated that a BRICS-backed currency could emerge within two years, potentially tied to gold.
Novogratz Warns of an Impending Economic Reset
Novogratz also pointed to early signs of a broader economic reset. He observed patterns that resemble emerging market dynamics, with higher interest rates and a weakening dollar. “We’re starting to behave more like an emerging market,” he said, stressing that for years, developed markets could run deficits without significant repercussions. However, he believes this era may be coming to an end.
Recent volatility in the bond market reflects deeper concerns over the US government’s fiscal approach. Novogratz argued, “The markets are signaling that the current strategy is unsustainable.” With the US debt load reaching $35 trillion, even small interest rate hikes now have substantial costs.
He also expressed skepticism about the tariff hike’s potential to significantly reduce the fiscal deficit. “This tariff increase accounted for only about 2% of taxes, while income and payroll taxes make up 85% of the revenue,” he said. Additionally, tax cuts elsewhere are complicating the situation. “The numbers simply don’t add up, and this uncertainty is scaring the markets.”
Novogratz sees the current volatility as a signal of something much larger—a shift toward a broader economic reset. Investors are looking for stability, and governments are reevaluating global economic integration. As a result, the cryptocurrency sector may need to wait for more stable conditions before adoption can accelerate again.
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