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Michael Novogratz’s crypto merchant bank Galaxy Digital is launching two Bitcoin (BTC) funds, targeting people between the ages of 50 and 80. The new funds aim to bring “the wealth of America.”
Mike Novogratz (54) decided to use the fact that there is plenty of wealthy Americans aged 50-80 and, until now, they were pretty much into more traditional types of investing such as stocks or pension funds. Cryptocurrencies surely weren’t one of the ways they thought they could increase their wealth. However, Novogratz thinks there might be a chance.
The truth is that nowadays crypto investors are normally the grandchildren of this population. But, even though Bitcoin investors are more tech-related, their wealth is slowly but surely declining, especially that can be seen in the US.
In the phone interview with Bloomberg, Novogratz explained that Galaxy’s funds will have much lower fees than its rivals such is, for example, the Grayscale Bitcoin Trust. Also, it will offer third-party custody from the Bakkt consortium and Fidelity Digital Assets that just recently got its New York trading license.
Steve Kurz, head of asset management at Galaxy Digital said:
“The existing landscape for accessing Bitcoin is incomplete. We are trying to offer secure service providers, low fees, simple access to Bitcoin. We wanted to create something that could plug into the existing infrastructure.”
The first one, Galaxy Bitcoin Fund, has a $25,000 of minimum investment needed and the thing is, you can withdraw funds only on a quarterly basis. On the other hand, Galaxy Institutional Bitcoin Fund has weekly liquidity but also a higher initial threshold.
As the pricing agent will act Bloomberg LP and Kurz explained that funds have been seeded with Galaxy’s own money.
Novogratz said he wanted to be among the first who will offer such a fund service because he believes that in the next year, almost all traditional companies and banks will offer the similar service, meaning, letting their users invest in Bitcoin. Asked of the type of his customers, he says the focus is on the investors who are currently attracted to gold or similar assets. He noted:
“You are seeing Bitcoin way outperform other coins right now, and I think that will continue until these coins start to get used for things. You also get more credentialed people – there are probably 20 billionaires I could name that made their money outside of crypto and are in crypto now. Every speculative asset needs people to tell the story, and people are buying the story.”
These funds may come as a help to other cryptocurrency services who are struggling to reach the institutional investors. In the times when those kind of investors are still being pretty skeptic on cryptocurrencies, this joint investment could make a change. As Novogratz said:
“It’s not a stampede by any stretch, but people are all doing their work. The next wave will come from the wealth advisers, maybe with endowments and small foundations participating.”
And, as we’ve already mentioned, Bakkt will serve Galaxy Digital as a custodian. Its CEO Kelly Loeffler commented this partnership:
“As institutions and sophisticated investors seek exposure to digital assets through new investment products, they are seeking the highest standards in asset security. The Bakkt Warehouse was designed to offer institutional-grade custody in safeguarding digital assets and to support the development of the market alongside products like the Galaxy Bitcoin Funds.”