Longtime stock investor Bill Miller told CNBC on Tuesday that he believes Bitcoin is firmly entering the mainstream, as the containment of the cryptocurrency recovery in recent months is significantly different from its rise of 2017 and its subsequent fall.
In an interview with “The Exchange,” Miller Value Partners founder and investment director said he believes Bitcoin still has room to move forward. The world’s largest cryptocurrency by market value traded around $ 55,800 on Tuesday afternoon. According to Coindesk, it has already met about 90% so far.
“Supply [of bitcoin] it grows 2% a year and demand grows faster. That’s all you really need to know, and that means it will increase, ”said Miller, who began buying bitcoins around 2014 or 2015 at an average cost of $ 350 per coin.
However, he acknowledged that historically volatile bitcoin is likely to continue to experience strong price changes, such as the one over the weekend, dropping the digital currency below $ 60,000. Last week it hit an all-time high of nearly $ 65,000.
Miller said the 2017 rally was, in fact, a bubble that finally burst. It’s different now, he argued, saying, “I don’t think this is a bubble at all in bitcoin. I think now is the beginning of a general integration.”
Bitcoin saw its price skyrocket in 2017, reaching what was then a record nearly $ 20,000 that December. It fell sharply in the following months, losing about 80% of its value in what is known as the “crypto winter”.
“Even during the bubble, it went down 20% on five different occasions, so with Bitcoin, volatility is the price you pay for performance,” added Miller, who managed a fund that won the S&P 500 for 15 years in a row while at Legg Paleta.
Bitcoin traded below $ 11,000 in October alone, but its rally gained strength in the fall and took off in 2021.
Institutional adoption has been cited as a factor in the rise of Bitcoin, as companies like Tesla buy digital currency with cash on their balance sheet. A couple of big Wall Street banks, Morgan Stanley and Goldman Sachs, are also taking steps to provide wealth management clients with exposure to Bitcoin.
Miller said he shares the belief held by other cryptocurrencies that bitcoin is “digital gold.”
Scarcity is a key feature of bitcoin, with a total supply limit of 21 million tokens. There are currently 18.69 million bitcoins in circulation, according to Coindesk. New bitcoins enter the market as a reward for so-called miners, who use high-power computers to verify transactions over the decentralized network.
“Gold has an asset class of about $ 10 trillion and bitcoin is $ 1 trillion, and it’s infinitely divisible or almost like that,” Miller said. “It can be easily transported and shipped anywhere in the world if you have a smartphone, so it’s a much better version, in terms of sale value, than gold.”