Value investor Bill Miller said Friday that he believes owning Bitcoin becomes a safer investment decision the higher the price of the digital currency.
Bitcoin was trading at more than $ 40,000 per currency on Friday afternoon, after hitting a record high of nearly $ 42,000 earlier in the day. The cryptocurrency has been in tears since March, coinciding with governments around the world making great stimulus efforts to offset the impacts of the coronavirus pandemic.
“It gets less risky the higher it goes,” because it’s still early in the adoption cycle, Miller told “The Exchange.” “This is the opposite of what happens with most stocks.”
“The total supply of Bitcoin grows by less than 2% a year and it is evident from the price that demand is growing much, much faster than that. As long as it is obtained, Bitcoin is likely to increase and perhaps considerably.” added Miller. , founder and investment director of Miller Value Partners.
Miller, who managed a fund that won the S&P 500 for 15 years in a row while at Legg Mason, said he did not have a specific price target for Bitcoin, but had “price expectations.”
“I think Bitcoin … should probably increase from 50% to 100% from here in the next 12 to 18 months. And if you were to ask me above or below, I would definitely say that it would be much more likely that be higher than lower, ”he said.
Volatility as a rule
Bitcoin has had dramatic corrections in the past and Miller warned investors that cryptocurrency volatility is unlikely to disappear any time soon, even though there are more institutional investors behind it. “I think if you can’t take that, you probably shouldn’t have Bitcoin,” he said.
“Bitcoin tends to move in outbreaks, which are usually followed by corrections,” Miller added. “I think there have been three 80% fixes, which is normal in this kind of very, very early technology with a totally very addressable addressing market.”
The price of bitcoin has experienced a robust rise, especially during the fall and new year. Since September 1, the value of digital currency has increased by about 230%.
Greater adoption by institutional investors has been attributed to help drive the rise, with Paul Tudor Jones and Stanley Druckenmiller presenting bitcoin as strong hedging against inflation. Rick Rieder of BlackRock announced it in November as a potential alternative to gold.
Miller, meanwhile, has owned the cryptocurrency for years.
In January 2018, Miller told CNBC that he began buying bitcoins around 2014 or 2015 at an average cost of $ 350 per coin. At the time, he said he had transferred his bitcoin holdings to an independent fund. On Friday, Miller said it was still so, but explained that he hopes to make changes to the rules to make it easier for him to own his primary funds.
“We have bitcoins in a partnership that my partner, Samantha McLemore, recently started as Patient Capital, and has a position of approximately 5%,” he said. “We don’t have it in the fund because it’s very, very difficult to do. Right now we’re looking at the regulatory aspects of that and we think the SEC should give us the go-ahead to do it in our funds.”