GameStop Plans $1.75 Billion Raise for Bitcoin Acquisition, Novogratz Warns of Overleveraging

GameStop has recently made headlines, not for its meme stock status, but for its plans to raise $1.75 billion, with potential uses including the acquisition of Bitcoin. This move, which might have excited the market a year ago, is now viewed with caution by Galaxy Digital CEO Mike Novogratz. Novogratz, a long-time advocate for Bitcoin, has expressed concerns about the growing trend of companies imitating Michael Saylor’s Bitcoin-heavy strategy, particularly those funding their Bitcoin acquisitions through significant debt raises.

Novogratz’s warning comes at a time when institutional interest in Bitcoin is on the rise. His concern is not about Bitcoin itself, but about the manner in which companies are acquiring it. He cautions that just because Saylor’s strategy has been successful does not guarantee the same outcome for others. The risk lies in the potential overleveraging, which could be detrimental in a market downturn.

Despite his concerns, Novogratz remains bullish on Bitcoin. He recently tweeted about the current bear market in trust, both domestically and globally, which he sees as a driving force behind the crypto rally. He draws a parallel to the 2008 financial crisis, when Bitcoin emerged, and notes that trust has not been restored since then. His advice to investors is to stay long on crypto.

Novogratz also commented on the potential drivers for Bitcoin’s price increase, attributing it to U.S. fiscal policy. He believes that the current populist governments, both on the left and right, are setting the stage for a favorable price trajectory for Bitcoin. While he did not provide a specific price target, he suggested that once the price starts to rise, it could continue to climb without a clear stopping point.

Beyond price action, Novogratz is optimistic about the structural shifts in the U.S. regulatory climate. He predicts that the next 24 months will bring significant changes, including trends like tokenized equities and fixed income, which could reshape how institutions interact with the crypto space.

Novogratz’s message is clear: while he is not advising companies to avoid Bitcoin, he urges them to approach it with a thoughtful strategy rather than as a bandwagon move. He acknowledges the irony of traditional institutions adopting herd behavior, a trait the crypto industry was built to transcend. Nonetheless, Novogratz continues to advocate for responsible growth in the crypto space.