The high-octane era of crypto speculation that once defined digital asset markets is gradually coming to an end, according to Galaxy Digital CEO Mike Novogratz. Speaking to CNBC on Tuesday, Novogratz argued that the industry is entering a new phase — one driven less by hype cycles and more by infrastructure, regulation, and real-world financial integration.
For years, crypto markets were fueled by explosive narratives: DeFi summer, NFT mania, meme coin surges, and perpetual leverage cycles. But Novogratz believes the next chapter will look fundamentally different. Instead of chasing 10x returns in months, investors may need to adjust to lower yields tied to tokenized real-world assets (RWAs) and blockchain-based financial services operating at global scale.
From Speculation to Infrastructure
Novogratz described the transition as a shift from “narrative-driven speculation” to “crypto rails” powering financial services. In his view, blockchain networks are increasingly becoming settlement layers for traditional financial products — including equities, bonds, credit instruments, and structured yield products.
The focus is moving toward tokenization — the process of representing real-world assets such as stocks, Treasuries, private credit, or real estate on-chain. While this unlocks efficiency, transparency, and 24/7 settlement, it does not necessarily deliver the extreme volatility-driven upside that earlier crypto cycles offered.
“The speculative phase attracted massive participation,” Novogratz noted. “But when leverage unwinds and large cohorts of traders are wiped out, it takes time for new narratives to rebuild confidence.”
Echoes of 2022 — But Without a Single Catalyst
Novogratz compared the recent market drawdown to two distinct events:
The November 2022 collapse following FTX’s bankruptcy, which triggered a deep liquidity crisis.
The October 2025 crypto flash crash, which erased approximately $19 billion in derivatives value in a short period.
Unlike FTX, the October sell-off did not revolve around a single corporate failure. Instead, it reflected structural fragility — leverage, crowded positioning, and rapid deleveraging across futures and options markets.
Even without a headline shock, Bitcoin fell sharply. According to recent market data, BTC has declined more than 47% from its all-time high above $126,000 reached in October. It is currently trading around $66,551 and briefly dipped near $60,000 last week. Over the past seven days, Bitcoin has lost roughly 10%, with Ethereum posting similar declines. Major altcoins such as XRP and Solana recorded even steeper pullbacks during the same period.
The takeaway, Novogratz suggests, is that crypto remains sensitive to liquidity cycles — but the drivers of volatility are evolving.
Galaxy’s $100 Million Hybrid Hedge Fund
Despite acknowledging the end of the “pure speculation era,” Novogratz emphasized that he remains constructive on the long-term outlook.
Galaxy Digital recently launched a $100 million crypto hedge fund designed to balance exposure between digital assets and equities. The fund is expected to begin operations before the end of March.
Under the proposed allocation framework:
Up to 30% of assets may be invested directly in crypto tokens.
The remainder will be allocated to equities of financial services firms positioned to benefit from digital asset adoption, regulatory clarity, and blockchain infrastructure growth.
This hybrid approach reflects Galaxy’s thesis: future returns may increasingly come from companies building regulated financial products around crypto technology, rather than from token price appreciation alone.
Tokenization: A Structural Shift
Tokenization is emerging as a central theme in institutional crypto strategy. By placing stocks, bonds, and other assets on blockchain networks, issuers can reduce settlement friction, improve transparency, and potentially expand global access.
However, Novogratz cautioned that tokenized equities and yield products will likely carry “a different yield structure” compared to the explosive growth rates that defined earlier crypto cycles. In other words, blockchain may modernize financial plumbing — but it does not magically increase the underlying cash flow of traditional assets.
This signals a maturing market. Instead of volatility-driven gains, future growth may depend on adoption metrics, regulatory frameworks, and integration with global capital markets.
A Market in Transition
The broader crypto landscape appears to be recalibrating. Retail-driven leverage has declined from peak levels. Institutional participation continues, but with greater emphasis on compliance and risk management. Regulatory clarity in major jurisdictions is gradually shaping product design and capital allocation strategies.
If Novogratz is correct, crypto’s next phase may resemble fintech evolution more than speculative mania. Infrastructure, custody, compliance, and tokenized capital markets could define the coming cycle.
For traders accustomed to rapid momentum swings, the adjustment may feel uncomfortable. But for long-term participants, the institutionalization of crypto rails may represent a more sustainable foundation.
This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research before making any investment decisions.
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