Galaxy Digital makes significant investments in Bitcoin, Ethereum

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Galaxy Digital, led by CEO Mike Novogratz, recently made significant investments in Bitcoin and Ethereum through Aave and Compound.

Debank data show that Galaxy has deposited 4,168 Wrapped Bitcoin (WBTC) tokens valued at $142 million and 16,000 ETH worth $28.6 million into Aave and Compound as collateral to borrow 71.6 million USDT and 21.9 million USDC from these platforms.

Following the move, AAVE and COMP prices saw a notable rise, increasing by five percent and three percent. These platforms had experienced even more significant gains, with AAVE surging over 20 percent and COMP by 12 percent during the recent rally, driven by the potential for the approval of a Bitcoin Exchange-Traded Fund (ETF).

Spot Bitcoin ETF offers advantages over other investments

On its website, Galaxy highlights the importance of a spot Bitcoin ETF and explains why it’s a better choice than other investment options. Current Bitcoin investment products have notable drawbacks for investors. These include high fees, low liquidity and tracking errors. Additionally, many investors cannot access these products.

Other indirect options for investing in Bitcoin, like equities, hedge funds and futures ETFs, also suffer from tracking inefficiencies. Many investors would rather avoid the administrative hassles of owning Bitcoin, such as managing wallets and private keys for self-custody and handling tax reporting.

Galaxy anticipates an upcoming Bitcoin bull run, emphasizing that spot Bitcoin ETFs could potentially bring in billions of dollars, with over $14.4 billion in inflows expected in their first year of approval. This is because the asset class is more accessible for most investors.

A spot Bitcoin ETF does not require a wallet, making it simpler for mainstream investors. A spot Bitcoin ETF traded on standard exchanges would likely be regulated by the SEC and, as a result, could offer tax advantages. Spot ETFs would also provide better price transparency compared to existing Bitcoin investment products.

Targeting Europe for expansion

In September, Novogratz said Galaxy Digital was expanding into Europe in response to increased regulatory scrutiny in the U.S.

It appointed Leon Marshall, a former executive at crypto broker Genesis, as its first head of Europe. Marshall’s goal is to establish a regional presence in London while other competitors withdraw due to the ongoing decline in digital asset prices.

Marshall explained that the progress made in Europe in creating legal frameworks for trading digital assets played a significant role in the company’s decision.

“The European market demand that we’re seeing, combined with the regulatory framework established by Mica, is robust,” Marshall said. “That makes Europe a desirable destination for crypto firms to build and grow.”

Many crypto companies have significantly reduced expenses in the past year, including Binance, Crypto.com and Gemini. Marshall emphasized that the situation has created an opportunity for Galaxy, saying, “We’ve seen a lot of competitors exit the space and that’s offered a unique opportunity for us.”

Marshall said he was looking to hire staff for various roles, including investment banking, asset management, crypto lending and derivatives.

Earlier this year, Galaxy teamed up with German asset manager DWS to provide crypto exchange-traded products to investors.

“Galaxy’s competitive advantage lies in collaborating with these institutions and offering our expertise,” Marshall said.