Michael Novogratz, founder and chief executive of Galaxy Digital, says crypto companies remain tightly tied to Bitcoin’s price and are unlikely to fully break that link for another three to four years.
Speaking about Galaxy’s business model, Novogratz said that even diversified crypto firms cannot escape market cycles yet, because most of their revenues are still directly linked to digital asset prices.
“If Bitcoin falls 30%, your revenue falls 30%,” he said, pointing to asset management, staking, and trading businesses where income is calculated as a percentage of the underlying crypto asset.
Why Price Dependence Still Matters
Novogratz explained that even if a crypto firm held no digital assets on its balance sheet, it would still feel the impact of price swings. Staking rewards shrink when token prices drop, trading activity slows, and asset management fees decline alongside valuations.
This strong correlation, he said, makes the crypto industry very different from traditional financial firms that have broader and more stable revenue streams.
Data Centers Offer a Partial Buffer
Galaxy has started to reduce its exposure to crypto price swings by expanding into data centers and infrastructure. Novogratz said the data center business is now as important, or even more valuable, than Galaxy’s crypto operations from a market capitalization perspective.
Because infrastructure follows a different cycle and has different capital needs, Novogratz said Galaxy could eventually split into two separate businesses. That decision, however, remains under review.
Crypto Could Surprise in 2026
Despite crypto’s recent under performance, Novogratz said he is not bearish. He also expects easier monetary policy ahead, with the U.S. Federal Reserve likely to cut rates. A weaker dollar, he said, could support risk assets, including crypto, over time.
Novogratz said crypto has lagged behind assets like gold and silver, which have already seen strong rallies. That gap, he believes, creates the possibility of a sharp move higher once momentum returns.
“The painful trade may actually be crypto going higher, not lower,” he said, adding that a clear break above key levels would change sentiment quickly. Novogratz said the broader setup for 2026 looks constructive, especially as investment in crypto infrastructure continues to grow.
For now, he said, crypto companies remain tied to Bitcoin’s price. But over time, as infrastructure businesses scale and revenue sources diversify, that dependence should gradually weaken.
