"It's a little bit of both," Novogratz said.

The FTX fallout had a ripple effect on the entire industry as a result of what appears to be reckless management practices and potential fraud.

Novogratz likened the collapse of FTX to the bankruptcy of Lehman Brothers during the 2008 financial crisis, citing bad practices, overleveraging and asset liabilities.

Lehman Brothers invested heavily in mortgage-backed securities. FTX issued excess FTT tokens and held a portion of its balance sheet in its native token. 

The Lehman Brothers bankruptcy in September 2008 was the peak of the subprime mortgage crisis. The bank became a symbol of the excesses in the 2008 financial crisis. Similarly, FTX is being viewed as representative of the excesses in crypto. 

At the same time, it's clear there was a bubble in crypto and other speculative asset classes, Novogratz said.

"We had this wild acceleration of prices in all these coins including baseball cards and wines and NFTs because the idea of value changed when the Federal Reserve was printing money ad infinitum," Novogratz said.

See Also: Bitcoin Bull Cathie Wood Says Grayscale 'Cash Cow' Of Barry Silbert's Group: 'They're Going To Try And Hold On To That'

What's Next: The Galaxy Digital CEO told CNBC that he's shocked Bankman-Fried isn't facing criminal charges after he did things with customer tokens that were "illegal." Although he's surprised he's still "running around the Bahamas," he doesn't expect it to last much longer.

"I think his day will come," Novogratz said.

"In no world is Bitcoin going away, or quite frankly the blockchain and Ethereum and everything else," Novogratz said.

150 million people have already decided to store some of their net worth in Bitcoin, he noted. 

"So this is a buying opportunity in the long run," Novogratz said.

$BTC, $ETH Price Action: At publication time, Bitcoin was up 1.98% over a 24-hour period at $16,478 and Ethereum was up 3.62% at $1,166.62.

Photo: WorldSpectrum from Pixabay.