Former hedge fund manager Novogratz's crypto bank drops in stock market debut

Cryptocurrency-focused merchant bank Galaxy Digital started trading on a Canadian stock exchange on Wednesday despite cooling investor interest and falling prices this year.

The stock opened at 2.75 Canadian dollars on the Toronto's TSX Venture Exchange under the ticker GLXY. Shares had fallen 20 percent in the first half hour of trading, and were trading at CA $1.98 as of 1:48 p.m. ET.

Former Goldman Sachs macro trader Michael Novogratz launched the company in November, a month before bitcoin hit its all-time high near $20,000. The firm took a $134 million hit in the first quarter, according to its first-ever financial disclosure released in Canada last week. The Manhattan-based firm reported a net loss of $103.3 million on trading, with $13.5 million on digital assets and $85.5 million of unrealized losses on those assets.

Canadian regulators kept the company from listing for eight months, and in the meantime bitcoin lost roughly half its value. Since the company sold shares in a private placement in January, the price of bitcoin has fallen by roughly 50 percent, according to data from CoinDesk.

In the disclosure last week, Novogratz outlined an unusual method for listing his merchant bank on Canada's TSX Venture Exchange: buying Canadian crypto start-up Coin Capital, then merging through a reverse takeover with Canadian shell company Bradmer Pharmaceuticals. The renamed company will trade as Galaxy Digital Holdings Ltd and will have more than 70 employees, according to the release.

Despite bitcoin's price plunge, Novogratz said in a BNN Bloomberg Television interview this week that going public was still the right move.

"If I knew what I know now, knew the crypto markets were going to swoon as much, and it was going to take so long, I might have stayed private for another year or so and then gone public," Novogratz said. "But I don't think it's a mistake."

The former Fortress hedge fund manager said he eventually plans for Galaxy to be "globally traded" in Hong Kong, Frankfurt and London.

Novogratz told CNBC in November that bitcoin could "easily" hit $40,000 by the end of 2018. He guessed ethereum, which was trading near $434 this week, could hit roughly $1,500. 

Bitcoin has gone the opposite direction since that call, down more than 60 percent since its high in December. Still, the cryptocurrency is up 180 percent from a year ago when it was trading around $2,800, according to data from CoinDesk.