Galaxy Digital CEO: DeFi and Tesla Frenzy to Enter Major Correction Phase

Galaxy Digital CEO and founder Mike Novogratz said in an interview with Bloomberg that Tesla and decentralized finance (DeFi) are both short-term crazes and may currently be in the early stages of a major correction.

DeFi and Tesla Frenzy

Mike Novogratz, the founder of Galaxy Digital and former partner at Goldman Sachs, stated in an interview with Bloomberg this week that both the traditional financial markets and the cryptocurrency markets are currently experiencing a frenzy of speculation, and these assets are expected to undergo a major correction soon.

In the traditional financial market, Tesla is a representative example, according to Mike Novogratz. He mentioned that he owns two Teslas and believes that Elon Musk is a genius and Tesla is one of the best car companies in the world. However, this does not justify the company's market value of $500 billion, with a trading P/E ratio as high as 1300 times.

Turning to the cryptocurrency market, DeFi is undoubtedly the most fervent concept recently. Mike Novogratz stated in the interview:

"We have seen the astonishing price changes in Ethereum recently. This is closely related to the emerging field of decentralized finance (DeFi). The events that have occurred in the DeFi sector recently are reminiscent of the speculative frenzy we witnessed in Tesla."

Using the recent hot project SushiSwap as an example, Mike Novogratz pointed out that the project attracted over $1 billion in liquidity in just five days, a situation he had never seen before. He warned that many high-risk assets may face a significant correction, and this "irrational prosperity" will not last long. It may soon experience a series of bubbles, and it already feels like we are approaching the peak of the bubble.

Furthermore, Mike Novogratz added that the current frenzy in DeFi trading reminds him of the cryptocurrency bubble in 2017:

"Back then, the hot trend was ICOs, with new ICOs popping up every day, and a group of people gathering around that ICO token to drive up the price. Liquidity and prices became crazy, and eventually collapsed. It feels a bit like what is about to happen next."