Galaxy Digital’s Q3 earnings mirror crypto euphoria

Galaxy Digital’s over-the-counter trading desk posted record volumes in the third quarter, signaling once again that institutional uptake of digital assets is on the rise. 

The company’s third-quarter earnings report showed a 75% year-on-year rise in trading volumes, reaching approximately $1.4 billion. The increase was attributed to an expanding counterparty base, the rollout of an electronic trading platform, and the continued growth of Galaxy Digital’s crypto derivatives business.

Assets under management totaled $407.4 million at the end of the third quarter, which include $82.4 million in passive Bitcoin (BTC) and index funds, and $325 million in the Galaxy EOS VC Fund. The latter is a partnership with blockchain merchant bank Block.one, founder of EOS.

Galaxy’s Bitcoin funds rose 17.3% in the third quarter. Its large-cap Crypto Index Fund returned 32.3%.

Mike Novogratz, founder and CEO of Galaxy Digital, told Cointelegraph:

“We’ve seen a remarkable surge of institutional interest in the digital asset space this year, as investors look for hedges against market volatility and new areas to find risk-adjusted returns in a low-rate environment. Looking ahead to 2021, we expect the adoption of digital assets, such as Bitcoin and Ethereum, to continue as more traditional investors embrace the asset class as a diversifier and safe haven alternative to gold.”

Tim Plakas, head of sales at Galaxy Digital Trading, elaborated:

Galaxy’s trading business has seen significant growth over the past year as our counterparty base has matured and grown in size as a result of more traditional funds entering the crypto space. [...] Over the next 6–12 months, I expect these trends to continue.”

Plakas highlighted the Q3 acquisition of BlueFire, a proprietary trading firm specializing in digital asset liquidity, as one of the biggest sources of competitive advantage. 

Galaxy Digital was founded in 2018 by billionaire Mike Novogratz in an effort to bring more institutional investors to digital assets. Novogratz said in today’s official press release that Galaxy Digital is preparing itself for “the clear, incoming wave of institutional adoption ahead of digital assets and blockchain solutions by investors, corporates and governments.”

While the 2017 bull market was largely driven by retail FOMO — the fear of missing out — the euphoria surrounding Bitcoin in 2020 is largely tied to institutional uptake.

There’s evidence that institutional investors are flocking to Bitcoin in greater numbers in the fourth quarter. Grayscale’s Bitcoin Trust saw record inflows at the start of November, putting it on track to reach 500,000 BTC by the end of 2020. That would amount to roughly 2.7% of Bitcoin’s circulating supply.

Institutional investors such as Paul Tudor Jones and Stanley Druckenmiller also own Bitcoin. Both have touted the cryptocurrency’s growth potential in the current macro environment. 

Bitcoin’s price peaked near $16,500 in the last 24 hours, according to TradingView data. It’s still trading well north of $16,000 at the time of writing.

This article has been updated with new comments from Galaxy Digital executives.