Two-thirds of crypto hedge funds will fail due to the massive sell-off that was sparked by Fed tightening, Mike Novogratz predicts

• Two-thirds of cryptocurrency hedge funds will fail as the market slump continues, Mike Novogratz says.
• The Galaxy Digital Holdings chief executive spoke at a Piper Sandler conference Wednesday.

Two-thirds of cryptocurrency hedge funds are likely to fail as broad market turmoil continues, Mike Novogratz said Wednesday.

Bloomberg first reported that the Galaxy Holdings chief executive told a Piper Sandler conference that the market's reaction to less stimulus paints a grim picture for crypto firms. Novogratz said that monetary tightening from the US Federal Reserve was the root cause of token volatility throughout 2022, as well as the downfall of Terra, which Galaxy was a heavy early investor in.

"There are literally 1,900 crypto hedge funds. My guess is two thirds will go out of business," Novogratz said.

The collapse of Terra, an algorithmic stablecoin that uses computer code to maintain a fiat currency peg, shocked cryptocurrency markets and erased billions in liquidity, pushing regulators to ramp up calls for stronger crypto oversight.

Despite the continued uncertainty, Novogratz added that Galaxy would continue to expand and will keep pace with hires even as rival firms downsize. Novogratz asserted that Galaxy would become "the go-to-place" once the market recovers.

Bitcoin, the largest cryptocurrency by market capitalization, is down 36% since the start of 2022. Bitcoin has faced resistance above the $30,000 level and was changing hands at $30,367 at presstime.