The billionaire CEO of Galaxy Digital believes that the froth currently surrounding NFTs doesn’t affect its legitimacy as an industry.
Speaking on CNBC’s Market Alert, Mike Novogratz, the CEO of Galaxy Digital, said that the rise in popularity non-fungible tokens (NFTs) have seen in the past several months represents a big shift in culture.
When asked whether Visa’s latest CryptoPunk purchase meant something for the industry or was purely symbolic, Novogratz explained that the quick price moves seen in many popular NFTs are a result of people getting too excited at the very beginning of a new market trend.
However, he believes that the hype won’t do much to delegitimize the industry.
NFTs are a type of token used to represent ownership of all kinds of unique items, ranging from art and collectibles to music and real estate. The tokens are secured and authenticated by the blockchain platform they’re issued on and can only have one owner at a time—making them rare and valuable.
NFTs are a legitimate industry, Novogratz says
The huge rise in popularity NFTs have seen in the past several months seems to rival only the ICO craze the industry saw in 2017. Having global financial giants such as Visa enter the space with NFT purchases has further fueled the fire surrounding the new asset class, pushing many to ask when the NFT bubble will pop.
Novogratz, however, believes that this is “normal excitement” seen at the beginning of any new market trend and that NFTs are here to stay. He used the example of The Fidenza #313, an NFT created by artist Tyler Hobbs that recently sold for 1,000 ETH, to show the massive price jumps NFTs experience. The art, now worth over $3.3 million, could have been bought for less than $4,000 just a couple of months ago.
“I think 15% of the total art sales this year were NFTs,” Novogratz said in the interview. “That seems a lot given that the market didn’t even exist four months ago. But the frothy prices don’t mean this isn’t a real industry,” he added.
The Galaxy Digital CEO said that a clear sign of the industry staying power came from rapper Jay Z, who recently changed his Twitter avatar to a Crypto Punk NFT he purchased.
“One of the kinds of culture says ‘I’m going to use an NFT as my avatar.’ It should have told everybody to buy Crypto Punks,” he said.
“This is a shift in culture and I think it’s a big, big deal.”