Crypto Policy Shift Set to Unleash Cycle-Breaking Investor Wave: Novogratz’s Bold Prediction

Wall Street's crypto bull sees regulatory tides turning—and bringing a flood of institutional capital that could rewrite market patterns entirely.

The New Institutional Playbook

Forget the retail-driven boom-bust cycles that defined crypto's first decade. Novogratz argues upcoming policy clarity will trigger what he calls 'the great institutional allocation'—pension funds, endowments, and sovereign wealth funds diving in with size that dwarfs previous entrants.

Regulatory Green Lights Flash

With multiple jurisdictions crafting clearer digital asset frameworks, traditional finance's compliance departments are finally getting comfortable. The dam isn't just cracking—it's about to burst open with fiduciary-grade investment vehicles.

Market Structure Transformation

This isn't more speculation. It's fundamental rewiring of capital flows as portfolio managers who've been sidelined for years finally get permission to play. They'll bring deeper pockets—and longer time horizons—than crypto natives ever dreamed of.

Breaking the Four-Year Cycle

The infamous crypto cycle that traders have relied on? Novogratz predicts it gets shattered when quarterly rebalancing meetings in wood-paneled boardrooms start including bitcoin allocation debates alongside bond duration discussions.

Of course, Wall Street always shows up fashionably late to the party—right after they've finished shorting the invitations. But this time, they're bringing the entire open bar with them.

Mike Novogratz appearing on Bloomberg on Tuesday. Source: Bloomberg

However, Novogratz said this crypto market cycle may differ, as investors are unlikely to sell at peak levels at the end of this year as they did in 2017 and 2021.

He added that people couldn’t previously use stablecoins on their iPhones or in social media apps because they weren’t necessarily legal, “but now they are.”

“You’re gonna have this new wave of participation, so we might not be in the traditional cycle.”

CLARITY Act a “freight train”

Coinbase CEO Brian Armstrong echoed Novogratz’s sentiment on Sept. 17, stating that he was certain Congress would pass the CLARITY Act, which defines the roles of the country’s financial regulatory agencies with crypto.

“I’ve actually never been more bullish on the market structure [bill] getting passed, it’s a freight train leaving the station,” he said at the time. 

Last week, Representative French Hill said the House Financial Services Committee hopes that action will be taken on the legislation in either October or November.

Democrats could push back on legislation

Novogratz also played down concerns about the TRUMP family’s involvement in crypto, confident that the Securities and Exchange Commission would follow up with any conflicts of interest.

“I don’t think you can prevent the children of people in power from participating in business,” he said.

He said Democratic lawmakers could make a big deal over what they perceive as “grift” from the Trumps and potentially push back on the crypto market structure bill.

Novogratz said there are now enough Democrats who see the value in crypto to get the bill passed, but it was “dumb for Democrats to be anti-crypto” during last year’s presidential election.

Chinese miners and Hayes added to market slump

Speaking on this week’s leverage flushout, which saw almost $200 billion wiped out from spot crypto markets, Novogratz pinned the drop on “big Chinese mining selling,” and Arthur Hayes’ “bearish commentary around Hyperliquid.”

“Hyperliquid got hit the hardest, and that hit some of the overall sentiment in the market, but I think this is just a pullback.” 

Hayes sold his entire stash of HYPE to put a deposit down on a Ferrari, and the token has fallen more than 23% since its all-time late high last week as whales continue to offload it.