The cryptocurrency market is probably in store for a “washout,” billionaire investor Mike Novogratz has said, after the Coinbase listing created a frenzy that drove up bitcoin and the likes of Dogecoin and XRP.
Novogratz, the founder and chief executive of crypto-focused investment company Galaxy Digital, told MarketWatch in a virtual event: “I've seen a lot of weird coins like dogecoin and even XRP have huge retail spikes, which means there's a lot of frenzy right now.”
He added: “That never ends well, and so we'll probably have a washout at one point.”
Novogratz also said: “In the next week, certainly we could have some volatility because of the excitement around Coinbase.”
Cryptocurrency exchange Coinbase went public on Wednesday, closing with a valuation of $65.4 billion, in what analysts have heralded as a coming-of-age moment for the crypto word.
Coinbase's direct listing to the Nasdaq generated a lot of excitement around cryptocurrencies. It sent bitcoin soaring to an all-time high close to $65,000 and also pushed the ether, XRP and Dogecoin cryptocurrencies to records.
But bitcoin (BTC) has fallen quite sharply since Coinbase's debut to below $62,959 on Thursday.
Despite his words of warning about the short-term outlook, Novogratz remains highly bullish on bitcoin, saying Coinbase's IPO is “monumental” for the industry.
He predicted that bitcoin could hit $100,000 by the end of the year and may even be worth $500,000 in three years' time.
Crypto entrepreneur Bobby Lee, who founded one of the first cryptocurrency exchanges, told Insider in March bitcoin investors should be more aware of the token's wild bull and bear cycles.
He predicted there will be another “winter” when the currency falls dramatically and stays low for two or three years. But Lee is also bullish over the long term, saying bitcoin could even hit $1 million in future bull runs.