Former Fortress hedge fund manager Michael Novogratz says Bitcoin (EXANTE: Bitcoin) can multiply more than four times in roughly the next 13 months.
"Bitcoin could be at $40,000 at the end of 2018. It easily could," Michael Novogratz said Monday on CNBC's "Fast Money." "Ethereum (ETH/USD), which I think just touched $500 or is getting close, could be triple where it is as well."
The total market capitalization of all digital coins on CoinMarketCap hit $304 billion Monday. Novogratz said he expects that could increase by about six times to $2 trillion at the end of next year.
"There's a big wave of money coming, not just here but all around the world," said Novogratz, who is planning to launch a $500 million digital assets fund through his new firm, Galaxy Investment Partners.
Novogratz attributed the growing uptake of Bitcoin to its supply. With a cap of 21 mln coins, the market cannot be flooded with more stock as prices rise. The scalability of the blockchain also contributes to the growing demand.
"What's different about these coins than other commodities, there is no supply response here. So it's a speculator's dream in that as buying happens there's no new supply response that comes up. So every price move gets exaggerated. It's going to get exaggerated on the way up. There will be 50 percent corrections. It will get exaggerated on the way down."
Novogratz said Monday that "probably over 20 percent" or "maybe even 30 percent" of his net worth is in cryptocurrencies. He said he's split roughly in half between bitcoin and ethereum.
But Novogratz doesn't recommend retail investors put any more than 1 to 3 percent of their net worth in cryptocurrencies, or wealthier investors to put more than 5 to 10 percent.