Novogratz: Bitcoin is 'digital gold' and will end the year at $10,000

Investing magnate Michael Novogratz thinks bitcoin should finish the year at $10,000 while ethereum is likely to close at $500.
Novogratz is in the midst of raising money for a cryptocurrency fund expected to hit $500 million. He told Bloomberg that bitcoin is like "digital gold."

Bitcoin
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Even after a huge move already this year, investing magnate Mike Novogratz sees cryptocurrencies making another leg up before 2017 comes to a close.

Bitcoin should finish the year at $10,000 while ethereum is likely to close at $500, the head of Galaxy Investment Partners and former head of the Fortress Investment hedge fund, told Bloomberg television in an interview. That would represent respective gains of 20 percent and 36 percent from their prices quoted Tuesday morning on CoinDesk.

Novogratz is one of the market's biggest digital currency bulls and is in the midst of raising cash for a crypto fund that he hopes to reach $500 million.

"Bitcoin is built on an amazing technology. There's a limited supply of it, people are trusting it," he said. "Remember, this whole revolution came out of a breakdown in trust, it came out of the '08 financial crisis where people say, 'We no longer trust financial institutions, we no longer trust governments.'"

His comments come as ethereum's price has exploded 4,540 percent higher and bitcoin is up a comparatively tame 760 percent in 2017.

But the cryptocurrency story extends beyond its two biggest stars. While bitcoin easily leads the way with a $138.3 billion market cap and ethereum is second at $35.5 billion, there are 13 digital currencies with caps in excess of $1 billion, according to CoinMarketCap. The latest member of the club is Qtum, which trades at around $14.44 and is up 125 percent since its launch in May.

Wall Street remains divided on bitcoin, as CEOs including Jamie Dimon at JPMorgan Chase and Larry Fink at BlackRock have derided it even as professional investors see opportunity. Cryptocurrencies have overcome a string of negative headlines, including the latest regarding a $31 billion bitcoin theft.

Respondents to the most recent CNBC Global CFO Council reflected those disagreements, with bitcoin is "real but in a bubble" and a "fraud" both gaining 27.9 percent responses.

A similar survey conducted by DataTrek Research found 39 percent see bitcoin in a bubble, with a median price forecast for the end of the year of $7,800, or about 6.5 percent below the current level.

Novogratz, though, sees bitcoin as "digital gold" because people buy it for much the same reasons they invest in the yellow metal, and predicted it will continue to attract attention and cash."We're in the second or third inning of this revolution," he said.