Michael Novogratz: Crypto Treasury Boom May Be Over

The Crypto Treasury Boom May Be Peaking

Michael Novogratz, the CEO of Galaxy Digital, has expressed his belief that the recent surge in companies establishing themselves with substantial cryptocurrency holdings may have reached its peak. Despite some firms continuing to expand their digital-asset portfolios, Novogratz suggests that the initial wave of new treasury-focused companies might be winding down.

During Galaxy Digital’s second-quarter earnings call, Novogratz acknowledged the vast opportunities within the crypto-treasury space but emphasized that the rush to form such companies is likely over. He noted that attention will now shift toward identifying which existing players can dominate the industry.

This sentiment aligns with the broader trend seen in the market, where early adopters like Strategy (formerly MicroStrategy) set the stage for others to follow. Strategy became a household name for its aggressive Bitcoin purchases, and Novogratz described it as a pivotal player in the Bitcoin ecosystem. He expects other firms to emulate this model by raising capital through debt or equity and using the funds to acquire more digital assets.

Ethereum's Potential in the Short Term

Among the newer companies emerging in the space, Novogratz highlighted BitMine Immersion and SharpLink Gaming. Both are backed by notable figures in the crypto world—Tom Lee, co-founder of Fundstrat, and Joe Lubin, respectively. These firms have built up significant Ethereum holdings, with BitMine holding over $2 billion and SharpLink accumulating more than $1.3 billion since May.

Novogratz explained that these companies are following a similar playbook to Strategy but swapping Bitcoin for Ethereum. He noted that while most of them offer similar products, they may differ in the types of tokens they hold or the mix of assets they invest in. However, he predicted that established treasuries would continue to grow, while newer firms may struggle to gain traction in a competitive market.

He also praised the role of treasury companies in expanding the appeal of cryptocurrencies. “These treasury companies have done an amazing job of bringing people into the crypto tent,” he said. Novogratz believes they will remain important as the market evolves and new ecosystems emerge.

In a previous interview with CNBC, Novogratz expressed confidence in Ethereum’s short-term performance. He suggested that Ethereum could outperform Bitcoin in the next three to six months and potentially reach the $4,000 mark. This view is supported by investor sentiment, with a Myriad poll showing 59% of predictors expecting ETH to hit a new all-time high before the end of 2025.

Growing Demand for Ethereum

Corporate buyers have also played a role in boosting Ethereum demand. Firms like BitMine Immersion and SharpLink have used treasury strategies to increase their exposure to the asset. On the retail side, Ethereum exchange-traded funds (ETFs), approved by the Securities and Exchange Commission last year, saw significant inflows. In July alone, they attracted $726 million in net inflows in a single day, marking their biggest 24-hour haul, with over $2.1 billion across the week.

Galaxy Digital's Q2 Performance

Galaxy Digital reported a net income of $30.7 million for the second quarter, a significant improvement from the $177 million loss recorded in the same period in 2024. The company works with more than 20 crypto-treasury investment firms, earning management fees for overseeing their token holdings. These partnerships have added roughly $2 billion in assets to Galaxy’s platform, creating a steady stream of recurring income, according to Novogratz.

Looking ahead, he sees treasury companies and ETFs as a way for hedge funds and eventually traditional financial institutions to gain exposure to cryptocurrencies without directly holding digital assets.

However, Novogratz also cautioned that the concept of tokenization—putting conventional assets like stocks on a blockchain—remains unresolved. He pointed to the SEC’s Project Crypto initiative, led by Chair Paul Atkins, which explores how U.S. markets might transition to blockchain technology. “The road map’s not written yet,” he said. “If you tokenize Apple stock, where does that liquidity exist? There isn’t a good answer yet. But we’re hyper-focused on it.”