Crypto Venture Firm Galaxy Digital Posts Losses: Is it a sign of recession in crypto?

Key Takeaways

  • Galaxy Digital’s net loss in this quarter was $111.7 million
  • Company justified loss by citing unrealized losses on digital assets and on investments in its trading and investments businesses
  • Investments stood at $1.0 billion as of March 31, 2022.
  • GDT’s counterparty loan and yield portfolio grew 20% sequentially quarter over quarter

Galaxy Digital Holdings Ltd (“Galaxy Digital” the “Company” or “GDH Ltd.”) released financial results for the quarter ended March 31, 2022, for both itself and Galaxy Digital Holdings LP. The firm recorded a net loss of $111.7 million for the quarter-ended March 31, 2022, compared to the $858.2 million gain recorded in the equivalent quarter in the previous year.

Michael Novogratz, Founder and CEO of Galaxy Digital highlighted weakness across crypto and equity markets during Galaxy’s earnings call on Monday, though said he isn’t “panicked by any stretch.” He further stated that his recent investor meetings point to growing adoption, and noted that “crypto as a tech play” is slowly gaining momentum.The financial highlights from the first quarter of 2022 are as follows

Financial Highlights for the First Quarter 2022

  • Net comprehensive loss was $111.7 million, compared to the recorded $858.2 million gain last year. The decrease was mainly owing to unrealized losses on digital assets and on investments in their Trading and Principal Investment businesses.
  • Partners’ Capital was $2.5 billion at the end of the quarter, which is a 50 percent surge from $1.7 billion recorded in the prior-year period. The Total value locked in DeFi for the sector decreased approximately 18% quarter-over-quarter to $80 billion during the first quarter of 2022.
  • Investments stood at $1.0 billion as of March 31, 2022, which is a decrease of $64 million from December 31, 2021. The reduction was driven by partially exiting highly appreciated investments during the quarter.

Operating Highlights in the First Quarter of 2022

  • Galaxy Digital Trading (“GDT”) The company’s counterparty loan and yield portfolio grew 20% sequentially quarter over quarter and 100% year over year to approximately $910 million.
  • Galaxy Digital Asset Management (“GDAM”) also reported preliminary assets under management of $2.7 billion as of March 31, 2022, which is a 5 percent decrease from the quarter ended December 31, 2021.
  • Galaxy Digital Investment Banking (“GDIB”) advised on the close of 4 transactions during the quarter.
  • Galaxy Digital Mining (“GDM”)The company demonstrated stellar revenue of $9.8 million and a net comprehensive income of $5.0 million in the quarter. 
  • Principal Investments (“GDPI” ) Within the first quarter of 2022, the company made investments in a slew of companies such as Gensyn and Encode, and follow-on investments for existing portfolio companies, including Certora.

Galaxy Digital is a tech-driven crypto focused financial services and investment management firm that provides institutions as well as direct clients with a full suite of financial solutions spanning the digital assets ecosystem. The New York City headquartered company operates in various businesses ranging from Trading, Asset Management, Investment Banking, Mining, and Principal Investments, among others 

Dhirendra Chandra Das
Dhirendra Chandra Das

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