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Hedge fund magnate Mike Novogratz delays his new Cryptocurrency fund

Unstable market could avert even the biggest supporters of the cryptocurrencies from investing and arise a lot of doubts. Mike Novogratz, a long-term optimist when it comes to bitcoin, was planning on launching a hedge fund worth 500 million US dollars in cryptocurrencies, but instead he postponed his plans saying bitcoin could go down to 8,000 dollars before recovering.

Novogratz changed his hedge fund project three times in several months, all because of the fast rise of the price of bitcoin. In October this year he said he would not be surprised if bitcoin falls to 10,000 dollars by April next year. He made several changes in November 2017 because of this prediction. On the other hand, Novogratz optimistically predicted that bitcoin will be worth 40,000 dollars in 2018.

The hedge fund magnate said bitcoin could be a bubble, but there was money in it. He was planning on raising 500 million dollars for a hedge fund which would operate on the cryptocurrency market. This hedge fund would be the largest one focused on the cryptocurrencies, with its launch scheduled for the middle of December this year. However, the launch of the fund is currently on hold.

Novogratz said to Bloomberg: “We did not like the market terms and we wanted to reevaluate the plans for our project. We look pretty smart pausing everything at this moment.”

One of the factors that influenced Novogratz the most is the conflict of interest which would occur if he bought bitcoin for the hedge fund and sold bitcoin from his personal account. He said: “There are so many conflicts in that business. It is going to be more complicated than I imagined.”

Mike Novogratz is known as one of the early investors in bitcoin and ether. He was buying bitcoins when their price was 50 dollars. When it comes to ethers, he bought them at the beginning, when their price was around 30 cents. He was selling his bitcoins and ethers periodically and it is estimated he earned around 250 million dollars by selling a part of his funds in 2017.

Despite his earlier statements regarding bitcoin, Novogratz now believes it could drop down to 8,000 dollars and take some time before recovering. He estimates that the price will stabilize between 10,000 and 16,000 dollars. The cryptorace this year thrilled many rookie investors in digital currencies. However, veterans such as Novogratz are starting calling for caution and it might be wise to listen to them. The investors need to remember the cardinal mistake: never invest more than you can afford to lose.

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