Cryptocurrency investment manager Galaxy Digital Holdings posted a heavy loss in the first quarter due to unrealized losses on its digital asset portfolio, underscoring the heightened volatility in the digital asset sector in 2022.
Galaxy Digital posted a global net loss of $111.7 million in the quarter ending March 31, compared to a profit of $858.2 million in the same quarter of 2021, the company announced Monday. In addition to unrealized losses on its digital asset portfolio, Galaxy’s global losses were also attributed to investments in its trading and investment businesses.
The company reported the aggregate profitability of its asset management, investment banking and mining operations. Investment banking and mining posted record revenues and net comprehensive income during the quarter.
Assets under management by Galaxy Digital Asset Management decreased 5% during the quarter to $2.7 billion.
Galaxy’s decline in Q1 profitability reflected the extreme volatility of the digital asset market, as Bitcoin (BTC) and altcoins experienced multiple large declines. The market appears to be entering a capitulation phase in May due to Bitcoin’s strong correlation with other risk assets.
Risk assets, including cryptocurrencies, have plummeted since the US Federal Reserve and other central banks decided to aggressively implement rate hikes to combat rising inflation. In the past week, The Fed raised interest rates by 50 basis points, marking the biggest upward adjustment in more than two decades.
Galaxy Digital, a crypto investment manager, founded by Mike Novogratz, is set to acquire institutional custodian service and wallet operator BitGo for $1.2 billion. https://t.co/QinaTE3PRE
— Cointelegraph (@Cointelegraph) May 5, 2021
Despite market volatility, crypto fund managers and venture capitalists continue to make large strategic investments in the sector. Galaxy plans to close its acquisition of BitGo later this year, having first announced its intention to buy the digital asset custodian in May 2021. Meanwhile, venture capital funding in crypto and blockchain projects hit a record high in the first quarter.
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