Galaxy Digital Reports $112M Loss in Q1 as Crypto Price Volatility

Underscoring heightened volatility in the digital asset space in 2022, cryptocurrency investment manager Galaxy Digital Holdings reported a large first-quarter loss due to unrealized losses on its digital asset portfolio.

Galaxy Digital announced on Monday that it had a net consolidated loss of $111.7 million for the quarter ended March 31, compared with a profit of $858.2 million for the same period in 2021. In addition to unrealized losses on its digital asset portfolio, Galaxy's overall losses were also attributed to investments in its trading and investment business.

The company reported the overall profitability of its asset management, investment banking and mining operations. Investment banking and mining posted record revenue and net comprehensive income during the quarter.

Assets under management held by Galaxy Digital Asset Management fell 5% to $2.7 billion in the quarter.

Galaxy’s decline in profitability in the first quarter reflected the extreme volatility in the digital asset market, with Bitcoin (BTC) and altcoins experiencing multiple sharp declines. The market appears to have entered a capitulation phase in May due to Bitcoin’s strong correlation with other risk assets.

Risk assets, including cryptocurrencies, have plummeted since the U.S. Federal Reserve and other central banks decided to aggressively raise interest rates to combat soaring inflation. Last week, the Fed raised interest rates by 50 basis points, the largest hike in more than 20 years.

Galaxy Digital, the crypto investment management firm founded by Mike Novogratz, is acquiring institutional custody service and wallet operator BitGo for $1.2 billion.

— Cointelegraph (@Cointelegraph) May 5, 2021

Despite market volatility, crypto fund managers and venture capitalists continue to make large strategic investments in the space. Galaxy plans to complete the acquisition of BitGo later this year after first announcing its intention to acquire BitGo in May 2021. Meanwhile, venture capital funding for cryptocurrency and blockchain projects hit an all-time high in the first quarter.