Despite falling crypto prices and minimal volatility in the digital asset market throughout the quarter, Galaxy Digital Holdings Ltd., headed by Michael Novogratz, seems to have faced a volatile market, citing a ‘widening’ of its quarterly losses.
Despite preparing for potential projects like a proposal for a Bitcoin exchange-traded fund (ETF), the company, recognized for its breadth of crypto services, confronts the headwinds of a hard quarter.
For the third quarter, Galaxy Digital recorded a net loss of $94 million, a significant rise from the $68 million loss reported in the third quarter of 2022.
This is a significant increase from the second quarter loss of $46 million and goes against the grain of analyst predictions, which had called for a continuation of the company’s losses at roughly $44 million.
Galaxy’s trading, asset management, and mining activities showed resiliency despite suffering losses. Trading revenue for the company was $14 million, down 2% from the prior quarter.
The company’s average loan book size has grown to $553 million, while trading volume has increased by 70%.
Galaxy Digital has seen a reversal since the end of the quarter, with the company reporting $124 million in profits before taxes and $24 million in trading revenue in October alone.
According to the research, this quick rebound was spurred by favorable market circumstances, particularly the upswing in digital asset values, with Bitcoin’s value jumping over 30% in the last month.
The asset management segment of Galaxy Digital had a significant boost in profits, growing by 11% over the previous quarter. Assets under management for the firm hit a record high of $3.9 billion at the end of September, up 58% from the previous quarter’s value.
Unfortunately, Galaxy Digital’s lesser stake holdings were negatively affected by the market’s volatility, and the company had to pay a sizable financial adjustment charge of $44.9 million as a result.
The financial strains of the quarter are highlighted by the comparison to the reassessment gain on prior write-downs of $128.1 million reported earlier in the year.
Novogratz, on the other hand, remains positive, claiming that the US Securities and Exchange Commission (SEC) would approve a direct Bitcoin ETF by the end of 2023, which Galaxy Digital is getting ready for in collaboration with investment management company Invesco.
Furthermore, recent researchers from Galaxy Digital have speculated that a spot Bitcoin ETF might attract more than $14 billion in its first year of operation. They claim that the current investing choices don’t appeal to a wide enough audience because of drawbacks like excessive fees and little liquidity. An exchange-traded fund (ETF) that “spots” Bitcoin would provide investors with easier access to direct Bitcoin exposure than current methods relying on self-custody.