It’s been a rough year for the cryptocurrency markets globally. Most retail investors have exited the market after registering insurmountable losses as several digital assets shed more than 90% of their market values over the past 10 months.
Their losses could, however, be attributed to lack of market experiences as most investors in this space are newbies and armature traders. Well, you could be thinking that institutional players are probably making a killing as most executives in the space have a background in the traditional investments.
According to recent news from some of the leading institutional players in crypto, you couldn’t be further from the truth because if figures from Mike Novogratz’s crypto merchant bank Galaxy Digital are anything to go by, then everyone is having a rough year.
Most companies focused on offering services for the cryptocurrency industry are private companies and therefore their financial statements are hidden from the public. But not Galaxy Digital Holdings LP, a Toronto Stock Exchange (TSX) listed company mandated by law to divulge its financial statements. Galaxy Digital may be operated from Canada but it has most of its operations running in the United States.
In its recent filing of the third quarter results of its operations, Galaxy Digital registered a $41 million loss in its books for activities that happened between the dates of 1st July and 30th September 2018. Total losses for the year so far are $136 million. Those are huge figures considering that the company was registered less than three years ago.
According to the statements, most of the losses were incurred from sales of Ether [ETH], Bitcoin [BTC] and Ripple’s XRP. Losses form ETH amounted to $22.1 million while BTC’s and XRP’s losses amounted to $9.7 million and $2.6 million respectively. The company got a reprieve after a bet on Ethereum Classic netted a gain of $1.9 million to offset some of the losses.
In the quarterly filings, the company attributed low trading volumes to the dismal performance.
“While we continue to improve and strengthen our trading business, lack of overall trading volume in cryptocurrencies has been a headwind,” the statement read.
In a previous interview with Financial Times, Mike Novogratz had admitted that his company had struggled for the better part of this year saying that,
“2017 was just fun, it was almost stupid. [But] this year has been challenging. It sucks to build a business in a bear market. [Staff] anxiety levels go up when crypto goes down… In most traditional business, [such as] Goldman Sachs, you don’t worry. There’s not an existential threat out there.”
What Galaxy Digital Offers
The digital assets bank offers a variety of products to its customers. These include advisory services, acquisitions, direct investments and mergers. The bank also provides distinct trading and assets management to its clients. Although it’s new trading arm and asset management division seems to be taking priority, with about $460 m in assets. GD remains to be a unique project within the crypto ecosystem.
Novogratz has invested $302 m from his pocket, and he still appears unshaken even after the recent sell off. He points out more figures and traditional finance companies that are joining the crypto world. Abigail Johnson, CEO at Fidelity, one of the largest fund management platforms in the world, which hold a $4.2tn worth of value are soon to be launching Fidelity Digital Assets.
Another huge figure he points out is Jeff Sprecher, CEO and chairman of the Intercontinental Exchange (ICE), which owns the New York Exchange is launching a cryptocurrency exchange, Bakkt.
According to Novogratz, “It is easy to get sceptical but there’s something happening.” He believes that the flip will be seen as soon as the crypto prices start rising next year.