Galaxy Digital’s Michael Novogratz on bitcoin ETFs: An amazing product for consumers & institutions

Galaxy Digital CEO Michael Novogratz joins ‘Squawk Box’ to discuss the SEC’s approval of spot bitcoin ETFs, how his bitcoin ETF with Invesco will differ from other ETF offerings, what it means for Wall Street investors, the impact on crypto at large, the 2024 election, and more.

APPROVED SPOT. NEXT GUEST BEHIND ONE OF THEM. JOINING US, CEO MIKE NOVOGRATZ. SAYING THE DAY WOULD COME FOR A VERY LONG TIME AND HERE IT IS. >> AND WE’RE HERE. >> YOU’RE HERE. SPOKEN TO PEOPLE WHO HAVE AN ETF LIKE YOU AND TALKING ABOUT THE DIFFERENT FEE STRUCTURES,

EVERYTHING ELSE, BUT HAS WILL ULTIMATELY MAKE YOUR FUND DISTINCT FROM CATHIE WOOD, DISTRINK FROM BLACKROCK, FIDELITY, GRAYSCALE? SAY TO THEMSELVES, MAKE I WANT TO BUY ONE ACTUALLY DECIDE? >> LONG RUN TWO OR THREE THAT ACTUALLY WIN. I DON’T THINK JUST ONE WINNER. A COUPLE WINNERS.

WE HAVE AN ETF IN CANADA WITH CI GROUP. WE STARTED IN SECOND. IN SECOND PLACE, AND NOW LARGEST ETF. I LOOKED LAST YEAR, TRACKING YEAR. AS AN INVESTORS DOES IT ATTRACT BITCOIN? LESS THAN 1% TRACKING ERROR. LARGEST COMPETITOR 11%. ALL ARE NOT CREATED D EQUITY. THE HIDDEN FEES.

DONE IT BEFORE. IN GERMANY, CANADA, BRAZIL. WE KNOW HOW TO RUN A CASH ETF. >> WHEN PEOPLE SAY SOMETHING COULD GO WRONG, THAT’S WHAT YOU’RE TALKING ABOUT? >> TRACKING ERROR. TODAY IS GOING TO BE CHAOS. RIGHT? YOU GOT 13 SALES FORCES TRYING TO PULL IN MONEY.

YOU’VE GOT GRAYSCALE, A GIANT THAT LOTS OF PEOPLE WILL REDEEM FROM. AND SO END OF THE DAY AT 2:30,UT IN REDEMPTIONS AND CREATES THERE’S GOING TO BE — >> YOU SAY A LOT OF PEOPLE REDEEMING AT GRAYSCALE. WHY DO YOU SAY THAT? >> LISTEN, PEOPLE BOUGHT

GRAYSCALE AT A 30%, 40%, 50% DISCOUNT TO NA V AND WITH BITCOIN FAR LOWER. SO THE CHANCE TO NOW GET OUT AT PAR, THEY’RE GOING TO DO THAT. >> IT’S ALL — BEFORE TODAY, IF YOU DECIDE TO BUY BITCOIN, YOU

HAD BEEN SORT OF READY TO DO SOME THINGS. A LOT — I MEAN, YOU KNOW RESISTANCE I’M TALKING ABOUT FROM THE AVERAGE PERSON. THEY’RE EVERYWHERE. NOT MENTION NAMES BUT THEY’RE EVERYWHERE. PEOPLE THAT WOULD NEVER DO IT. OPEN A COINBASE, GET YOUR OWN WALLET.

NOW EASY TO DO IT WITH $10,000. PUT UP A 50 FOR BITCOIN, SOMEONE WITH A LOT OF CONVICTION. ANYONE THAT CAN BUY TEN GRAND NOW AND CATHIE WOODS SAYS GOING TO $750,000, PEOPLE PUT TEN GRAND IN HAVE $150,000 IN A COUPLE YEARS IS TOO EASY.

I THINK YOU COULD MAKE A CASE THAT THE, YOU KNOW, THE PEOPLE THAT HAD THE NERVE TO DO IT AND STEP OUT AND NOT BE PART OF THE PACK THAT JUST WERE ANTI-BITCOIN, ALREADY MADE THEIR MONEY. NOT EVERYONE ELSE IS GOING TO GET RICH NOW.

IT’S TOO LATE. >> LISTEN, YOU KNOW, THE EARLIEST WERE GET RICHEST. >> YOU THINK GOING TO 750? >> HER LIPS TO GOD’S EARS. I THINK OVER TIME THIS WILL CONTINUE TO APPRECIATE. DO I THINK IT’S GOING TO 750 IN THE NEXT YEAR OR TWO, THREE YEARS?

NO, I DON’T. I DON’T. HOPE IT DOESN’T, QUITE FRANKLY. IF IT DOES IT MEANS THE U.S. ECONOMY HAS FALLEN INTO A DIRE, DIRE STRAIT. >> SMART MONEY INSTITUTIONS ARE IN, BAG HOLDERS ARE — >> WHAT I THINK YOU’RE MISSING IS, THIS IS A LIMITED SUPPLY ASSET.

WE DON’T HAVE A LOT OF LIMITED SUPPLY ASSETS. THERE ARE A LOT OF PEOPLE THAT BELIEVE IN THIS LIKE A RELIGION AND ARE NOT SELLING. >> THAT’S RIGHT. 70% WON’T SELL. WHERE’S IT COME FROM? >> DRIVE UP PRICE GET TO-ISH DID.

>> SHORT TERM SAY TO YOURSELF A BUNCH OF PEOPLE BOUGHT IN THE LAST THREE, MONTH FOUR MONTHS SELL INTO THIS? FOLD? >> I THINK TODAY LITERALLY SEE 50,000 AND 40,000 TRADE. YOU’LL SEE A LOT OF VOLATILITY TODAY. TRADITIONALLY, ETFs WEREN’T THE HIGH. SHORT-TERM HIGH. RIGHT?

ALMOST EVERY ONE OF THEM CAME OUT. THEN A SELL-OFF AND THEN THE RALLY. >> I IMAGINE WE’LL START SEEING ADVERTISING. YOU KNOW, CNBC ON AND “WALL STREET JOURNAL” AND OTHER PLACES, BECAUSE ALL OF THESE FOLKS WHO HAVE THESE IT ETFs ARE DESPERATELY GOING TO NEED

CUSTOMERS. >> INVESCO A SALES CALL. I IMAGINE THE OTHERS DOING THE SAME THING. BITCOIN HAS ALWAYS BEEN ABOUT ADOPTION. SOLD BITCOIN. BOUGHT IT. CONVINCE PEOPLE CALLED ORANGE PILLING. HENCE MY BEAUTIFUL JACKET. >> IT FITS. A JACKET, DIDN’T HAVE GLASSES — >> MY WARBY BROTHERS BROKE ABOUT

A WEEK AGO. >> I’VE SEEN BLUE GLASS, IN ALL KINDS OF CRAP. YOU DON’T HAVE GLASSES? YOU DON’T NEED A SAFETY PIN? >> GLASSES FASTER THAN MOST PEOPLE GO THROUGH COFFEE. >> BUT YOU GOT THE ORANGE, AND NONE OF MY JACKETS FIT AS WELL

AS THEY USED TO. >> CAN YOU SPEAK TO THE IDEA OF CONSOLIDATION AMONG THESE PLAYERS? GRAY SCALIE, IS THAT A COMPANY, GIVEN HOW MANY CUSTOMERS THEY HAVE, THAT COULD BE A VALUABLE GROUP OF CUSTOMERS, MAYBE TO SOMEBODY ELSE? >> I CAN’T GET INTO THEIR HEADS

WHY THEY PUT THEIR FEES FIVE TIMES HIGHER THAN EVERYBODY ELSE. >> ALL THE REASONS YOU JUST GAVE. >> ETFs BROADLY GET SOLD BY RIAs, AND YOU GOT TO GO THROUGH MORGAN STANLEY AND GOLDMAN-SACHS, AND IT’S A HUGE ODD PROCESS, DUE DILIGENCE PROCESS.

MY GUESS IS GRAYSCALE IS SAYING, WE’RE NOT GOING TO CLEAR THAT HURDLE FOR ALL THE REASONS IN OUR PAST. AND THEREFORE, WE’RE GOING TO HOLD ON TO OUR ASSETS AS LONG AS WE CAN. AND THERE’S A LOT OF PEOPLE THAT JUST — >> THEY’RE MELTING IT DOWN FOR

THE CLIENTS? >> THAT’S MY BIAS. I COULD BE WRONG. >> WHERE, THEN, DO YOU PUT FIDELITY OR BLACKROCK IN THIS? >> I THINK THERE’S GOING TO BE A WAR BETWEEN INVESCO, FIDELITY, AND BLACKROCK. >> WHAT DOES IT TAKE TO WIN? ARE THESE GUYS GOING TO HAVE TO

LOSE MONEY SNN >> THERE’S NOT A WHOLE LOT OF FEES. FOR THE CONSUMER AND THE INSTITUTION, THIS IS AN AMAZING PRODUCT, AND I THINK WHO’S GOING TO HAVE THE BEST TRACKING ERROR? WE THINK BTCO IS GOING TO HAVE THE BEST TRACKING ERROR. >> MARKET CAP’S A TRILLION

DOLLARS, GIVE OR — $950 BILLION FOR BITCOIN. HOW MUCH DOES THE ETF UNIVERSE AGGREGATE, AND WHAT PERCENTAGE OF THE — DOES IT EVEN MOVE THE NEEDLE ON $950 BILLION? >> IT DOES. PRICES ARE ALWAYS SET ON THE MARGIN. >> AND PEOPLE DON’T WANT TO SELL.

>> PEOPLE DON’T WANT TO SELL. LISTEN, YURM, IN THE FIRST THREE DAYS OF THIS WEEK, ISSUED $108 BILLION OF BONDS. THREE DAYS. IT WAS WEDNESDAY AFTERNOON, $108 BILLION IN BONDS. GOVERNMENTS AROUND THE WORLD ARE ISSUING TOO MUCH DEBT. THEY’RE PRINTING TOO MUCH MONEY, AND THAT’S WHY BITCOIN IS GOING UP.

THIS IS A HISTORIC DAY, BECAUS