Securities investor Bill Miller said on Friday that he believes holding bitcoin becomes a safer investment decision, the higher the price of digital currency.
Bitcoin traded more than $ 40,000 on the currency on Friday afternoon, after hitting a record nearly $ 42,000 earlier in the day. The cryptocurrency has been in tears since March, coinciding with governments around the world making massive stimulus efforts to offset the impact of the coronavirus pandemic.
“It becomes less risky as it grows, because it is still at the beginning of the adoption cycle,” Miller told The Exchange. “This is the opposite of what happens with most actions.”
“The total supply of Bitcoin is growing by less than 2% per year and it is obvious from the price that demand is growing much, much faster than that. As long as it is obtained, bitcoin is likely to grow more and maybe considerably higher.” added Miller, founder and investment director of Miller Value Partners.
Miller, who managed a fund that defeated the S&P 500 for 15 consecutive years while at Legg Mason, said it did not have a specific price target for bitcoin, but rather had “price expectations.”
“I think bitcoin … should probably grow by 50% to 100% from here in the next 12-18 months. And if you were to ask me above or below, I would certainly say that it would be much more likely to be higher than below, “he said.
Volatility as the norm
Bitcoin has had dramatic corrections in the past, and Miller has warned investors that cryptocurrency volatility is unlikely to disappear soon, even if more institutional investors get behind it. “I think if you can’t take that, you probably shouldn’t own bitcoin,” he said.
“Bitcoin tends to move in spurts, which tend to be followed by corrections,” Miller added. “I think there have been three corrections of 80%, which is normal in this type of technology very, very early, with a total, very large, addressable market.”
The price of bitcoin has risen robustly, especially in the autumn and in the new year. Since September 1, the value of digital currency has increased by about 230%.
Increased adoption by institutional investors has been credited with helping fuel growth, such as those of Paul Tudor Jones and Stanley Druckenmiller by launching bitcoin as a strong hedge against inflation. Rick Rieder of BlackRock in November promoted it as a potential alternative to gold.
Miller, in turn, has owned the cryptocurrency for years.
In January 2018, Miller told CNBC that he began buying bitcoin around 2014 or 2015 at an average cost of $ 350 per coin. At the time, he said he had moved his bitcoin holdings to a separate fund. On Friday, Miller said that is still the case, but explained that he hopes to make changes to the rules to facilitate holding in his primary funds.
“We own bitcoin in a partnership that my partner, Samantha McLemore, initially called Patient Capital and is about 5% position there,” he said. “We don’t have it in the background because it’s very, very difficult to do that. We’re now looking at the regulatory issues and we’re thinking of the SEC giving us approval to do that in our funds.”