Galaxy Digital CEO Mike Novogratz, the crypto investor who has made billions investing in crypto, said exorbitant amounts of debt that the crypto sector previously had are leaving, but most of it is gone now.

"It feels like we're 90% through that deleveraging," he said in an interview with CNBC. "The problem is for you to go much higher, you need the narrative to go much higher and you need new capital to come in."

Novogratz sees the sector going "choppy sideways" for a while until the Federal Reserve pulls back from its monetary tightening to change the macroeconomic narrative, or until cryptos recover from the damage "people get equilibrium, and the market gets going again."

Comments came after a dramatic sell-off in the crypto market, leading a number of crypto firms to run low on liquidity. Many have either halted customer withdrawals or, in the case of Voyager Digital, Vauld, and Three Arrows Capital filed for bankruptcy.

Bitcoin plunged 70% of its peak value in November of last year when the cryptocurrency was worth around $67,566.83. The largest crypto in the world by market value is currently trading around the $21,370 mark.

Novogratz added that the crypto market doesn't have a central bank acting as a lender of last resort that could step in during a crisis. Meanwhile, the crypto sector was far too leveraged.

"Shame on lots of the players for running what's just irresponsible not just leverage but asset-liability mismatch, taking consumer deposits in overnight and lending them out," he said.