Mike Novogratz says crypto speculation era is fading as institutions take over
Bitcoin’s sharp decline in early 2026 is not the result of a single shock, but rather a structural shift in who dominates crypto markets, according to Galaxy Digital CEO Mike Novogratz.
Speaking at the CNBC Digital Finance Forum in New York, Novogratz said the industry may be transitioning away from the speculative environment that once defined it. Bitcoin is down more than 21% so far this year and fell to $60,000 last week — its lowest level in roughly 16 months. That marked a drop of nearly 50% from its record back in October 2025.
No smoking gun behind the decline
Unlike previous downturns, Novogratz said the current weakness lacks a clear catalyst. When bitcoin fell 22% in less than a day back in November 2022 following the collapse of FTX, there was a “breakdown in trust,” he said.
“This time, there’s no smoking gun,” Novogratz told CNBC. “You look around like, what happened?”
He pointed instead to the massive liquidation event in October 2025, when more than 1.6 million traders saw a combined $19.37 billion in leveraged positions erased over a 24-hour period. The episode, he said, “wiped out a lot of retail and market makers” and placed sustained pressure on prices.
“Crypto is all about narratives, it’s about stories,” he said. “Those stories take a while to build and you’re pulling people in … so when you wipe out a lot of those people, Humpty Dumpty doesn’t get put back together right away.”
From retail speculation to institutional rails
Novogratz argued that the industry is moving beyond what he called “the age of speculation.” Institutional investors, who typically operate with lower risk tolerance and stricter controls, are increasingly replacing retail traders who once sought outsized returns.
“Retail people don’t get into crypto because they want to make 11% annualized,” he said. “They get in because they want to make 30 to one, eight to one, 10 to one.”
While speculation will not disappear entirely, Novogratz said crypto infrastructure will increasingly be used to support banking and financial services globally, including tokenized stocks and real-world assets with “a different return profile.”
He also expressed confidence that regulatory clarity will eventually arrive. “I talked to [Senate Minority Leader] Chuck Schumer two nights ago and he said ‘We’re going to pass the goddamn CLARITY Act,’” Novogratz said. “The Democrats want to pass the act, and the Republicans want to.” He added, “We need it for spirit back in the crypto market.”
Conclusion
Novogratz said the current downturn reflects a structural transition rather than a crisis of confidence. The liquidation of $19.37 billion in leveraged positions and bitcoin’s nearly 50% drop from its October 2025 peak underscore the end of a highly speculative phase. As institutions replace retail traders, crypto markets may become more regulated, more integrated with traditional finance and less prone to extreme upside rallies.
Read also: Ethereum under pressure as it falls below $2,000
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