The biggest U.S. cryptocurrency company has reportedly been valued at billions of dollars and that's a bullish sign for the industry's legitimacy, according to former Fortress hedge fund manager Michael Novogratz.
Coinbase is negotiating a deal with investment firm Tiger Global that would value it at about $8 billion, technology website Recode and Dow Jones reported Tuesday. The deal would make it one of the most highly valued U.S. start-ups.
"Here's the poster child of the crypto space worth $8 billion — that's a real company, and Tiger's not a flake of an investor. These are smart, savvy guys," Novogratz said at The Economist's Finance Disrupted conference in Manhattan Tuesday.
Coinbase is reportedly looking at an investment of up to $500 million, Recode said, citing people familiar with the deal.
Wall Street has not been entirely sold on the value of cryptocurrency.
Berkshire Hathaway CEO Warren Buffett famously equated bitcoin to "rat poison." Billionaire hedge fund manager Ken Griffin told CNBC that it had "many of the elements of the tulip bulb mania we saw back hundreds of years ago in Holland," referring to the tulip craze in the 17th century which is widely considered one of the first major financial bubbles.
Others, including widely-followed investor Dennis Gartman, have drawn the same tulip-hype comparison.
The Coinbase news flies in the face of bitcoin being "tulip-mania," said Novogratz, a former Goldman Sachs macro trader.
Bitcoin has dropped more than 53 percent this year alone, and was trading near $6,540 Tuesday. Others like ether and XRP fared even worse, and are down 65 and 76 percent respectively in 2018, according to data from CoinDesk.
Novogratz, whose cryptocurrency-focused merchant bank Galaxy Digital went public on a Canadian stock exchange in August, predicted major institutional money in bitcoin by next year.
"You're going to see pensions and endowments come in, or I will literally come back next year, and wear no shoes," Novogratz said.