Galaxy Digital Holdings, a crypto investment manager, reported a steep loss in the first quarter due to unrealized losses in its digital asset portfolio, signaling increased volatility in the digital asset industry in 2022.
Galaxy Digital reported a net comprehensive loss of $111.7 million in the quarter ended March 31, compared to a gain of $858.2 million in the same period in 2021, according to the company’s announcement on Monday.
The overall losses were ascribed to investments in its trading and investing businesses, in addition to unrealized losses in its digital asset portfolio.
Asset management, investment banking, and mining businesses were all profitable, according to the company. During the quarter, investment banking and mining reported record revenue and net comprehensive income.
Galaxy Digital Asset Management’s assets under management fell 5% to $2.7 billion in the third quarter of 2021.
Galaxy’s deteriorating income in the first quarter paralleled the digital asset market’s extraordinary volatility, with Bitcoin (BTC) and altcoins seeing several big losses. Due to Bitcoin’s strong association with other risk-on assets, the market appears to be approaching a capitulation period in May.
Since the US Federal Reserve and other central banks chose to aggressively pursue rate hikes to tackle skyrocketing inflation, risk assets, including crypto, have plummeted. The Federal Reserve raised interest rates by 50 basis points last week, the greatest increase in nearly two decades.
Crypto fund managers and venture capitalists continue to make substantial, strategic investments in the field despite market volatility.
Galaxy hopes to complete its acquisition of BitGo later this year, having previously declared its intention to do so in May 2021. In the first quarter, venture capital funding for crypto and blockchain projects hit a new high.
