Quick takeaways:
- Mike Novogratz has confirmed he will be keeping his Terra (LUNA) tattoo.
- He explained that the tattoo will be a constant reminder that venture investing requires humility.
- Mr. Novogratz made the confirmation in a Galaxy Digital letter to shareholders, friends, partners, and the crypto community.
- According to his analysis, the flash crash of LUNA and UST reinforces the core tenets of investing that include keeping a diversified portfolio, taking profits along the way, having a risk management framework, and understanding all investments happen in a macro framework.
In the last week or so, Crypto-twitter has been abuzz with speculation as to what billionaire investor Mike Novogratz will do with his LUNA tattoo after the coin nosedived in the crypto markets as a result of UST’s depegging and the meltdown that soon followed.
Mike Novogratz, who is currently the CEO of the crypto-focused investment company of Galaxy Digital, has since confirmed that he will be keeping the LUNA tattoo. Mr. Novogratz made the confirmation in a letter to Galaxy Capital’s shareholders, friends, partners, and crypto community.
His recent statement on the tattoo and a picture of it that he shared back in January of this year can be found below.
With hindsight things always look clearer. My tattoo will be a constant reminder that venture investing requires humility.
Maybe a stretch 😉 pic.twitter.com/eiY0Qe4o0B
— Mike Novogratz (@novogratz) January 17, 2022
The Flash Crash of LUNA and UST Reinforces Four Tenets of Crypto Investing
In the letter, Mr. Novogratz pointed out that the downward pressure on LUNA’s reserve assets coupled with UST withdrawals triggered a stress scenario similar to what is traditionally known as a ‘run on the bank.’ According to his analysis, the flash crash of LUNA and UST reinforced the following core tenets of crypto investing:
- Keeping a diversified portfolio
- Taking profits along the way
- Having a risk management framework
- Understanding that all investments happen in a macro framework
Regarding the latter, Mr. Novogratz explained that the ongoing ‘global macro backdrop has been brutal for all risk assets this year.’ He highlighted that the pullback experienced in the stock markets had found its way into crypto, thus affecting Bitcoin and altcoins, further compounding the situation that faced LUNA and UST.
He said:
Growth stocks with negative cash flow are down as much as 50-70% this year. Crypto has been under pressure, with core assets like BTC and ETH down about 58% each from all-time highs– and altcoins are down an average of 80% from all-time highs.
Central bankers are in the early stages of unwinding a massive liquidity bubble – fueled by unprecedented fiscal and monetary policy injections into economies across the globe, including in the US – that had propped up all risk assets, including crypto.
The “free money forever” ethos of the last decade has left us staring in the face of the biggest bout of inflation since the 70s.
Many assets that had meteoric rises in the period since Covid have suffered meaningful and correlated corrections. This macro backdrop put pressure on Luna and the reserves held to back UST.