Crypto policy shift to bring cycle-breaking wave of investors: Novogratz

The passing of two key crypto bills in the US will usher in a new wave of crypto participation that could upend the traditional four-year market cycle, says Galaxy Digital CEO Mike Novogratz.

Novogratz told Bloomberg on Tuesday that the stablecoin-regulating GENIUS Act, signed into law in July, and the CLARITY Act, which outlines regulatory agencies’ jurisdiction over crypto, would lead to a surge of new investors that would disrupt the four-year cycle pattern.

“It’s a big deal. With those two bookends of legislation, it’s going to unleash a tremendous amount of new participation in crypto.”

Many crypto investors believe the market follows a pattern of price movement coinciding with the Bitcoin halving roughly every four years. The last halving occurred in April 2024, so some believe the current bull market could soon end.

Mike Novogratz appearing on Bloomberg on Tuesday. Source: Bloomberg

However, Novogratz said this crypto market cycle may differ, as investors are unlikely to sell at peak levels at the end of this year as they did in 2017 and 2021.

He added that people couldn’t previously use stablecoins on their iPhones or in social media apps because they weren’t necessarily legal, “but now they are.”

“You’re gonna have this new wave of participation, so we might not be in the traditional cycle.”

CLARITY Act a “freight train”

Coinbase CEO Brian Armstrong echoed Novogratz’s sentiment on Sept. 17, stating that he was certain Congress would pass the CLARITY Act, which defines the roles of the country’s financial regulatory agencies with crypto.

“I’ve actually never been more bullish on the market structure [bill] getting passed, it’s a freight train leaving the station,” he said at the time. 

Last week, Representative French Hill said the House Financial Services Committee hopes that action will be taken on the legislation in either October or November.

Democrats could push back on legislation

Novogratz also played down concerns about the Trump family’s involvement in crypto, confident that the Securities and Exchange Commission would follow up with any conflicts of interest.

“I don’t think you can prevent the children of people in power from participating in business,” he said.

He said Democratic lawmakers could make a big deal over what they perceive as “grift” from the Trumps and potentially push back on the crypto market structure bill.

Novogratz said there are now enough Democrats who see the value in crypto to get the bill passed, but it was “dumb for Democrats to be anti-crypto” during last year’s presidential election.

Chinese miners and Hayes added to market slump

Speaking on this week’s leverage flushout, which saw almost $200 billion wiped out from spot crypto markets, Novogratz pinned the drop on “big Chinese mining selling,” and Arthur Hayes’ “bearish commentary around Hyperliquid.”

“Hyperliquid got hit the hardest, and that hit some of the overall sentiment in the market, but I think this is just a pullback.” 

Hayes sold his entire stash of HYPE to put a deposit down on a Ferrari, and the token has fallen more than 23% since its all-time late high last week as whales continue to offload it.