Billionaire Mike Novogratz says that if this happens, Bitcoin and Ethereum could trigger parabolic moves

Galaxy Digital CEO Mike Novogratz says the two largest crypto assets by market cap could explode past previous all-time highs if institutions start investing small amounts of capital in digital assets.

In a new interview with CNBC, the billionaire says the US government's increasing inability to maintain a budget and avoid deficits is bullish for crypto.

Given the likelihood of higher inflation and lower interest rates, Novogratz says Bitcoin (BTC) and Ethereum (ETH) would experience a supply shortage and go parabolic if institutions decided to convert even small amounts of their portfolios into cryptocurrencies.

“I've been in DC a lot in the last four months. If I were confident that we would get a Simpson-Bowles amendment to balance the budget or exercise fiscal caution, I wouldn't be so bullish on Bitcoin. But I just don't, and we're heading into an election year.

So you will have a Fed cut with a budget deficit of 5% and a projected budget deficit of 5% next year and the year after that. If people start moving 1% of their portfolio, institutions 1%, not 10, just 1, then there is no great supply of Bitcoin or Ethereum.”

Novogratz, an early Ethereum investor, says Bitcoin is entering unprecedented supply and demand dynamics that he believes could easily push BTC well above its previous all-time high.

“We have customers who are platform customers and buy enough Bitcoin every day to take out all the miners. So if you think about supply/demand dynamics, we've never had a situation where there's a global market and such limited supply. And that's why I think Bitcoin can go much higher. I think the first stop next year will be the old highs of $69,000, but I wouldn’t be surprised if it goes above that.”

BTC is worth $42,411 at the time of writing, while ETH is trading for $2,194.

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