Valuable investor Bill Miller said on Friday that he believes that owning bitcoin becomes a safer investment decision the higher the price of the digital currency becomes.
Bitcoin was trading at more than $ 40,000 per currency on Friday afternoon, having registered a record of almost $ 42,000 earlier in the day. The cryptocurrency has been in shambles since March, which coincides with governments around the world making massive stimulus efforts to offset the impacts of the coronavirus pandemic.
“It gets less risky the higher it goes” because it’s still the start of the adoption cycle, Miller said in “The Exchange”. “This is the opposite of what happens with most stocks.”
“The total supply of Bitcoin is growing at less than 2% per year and it is obvious from the price that demand is growing much, much faster than that. In the meantime, bitcoin is likely to increase and perhaps be considerably higher,” he added. Miller, founder and investment director at Miller Value Partners.
Miller, who managed a fund that hit the S&P 500 for 15 consecutive years while at Legg Mason, said he did not have a specific target price for bitcoin, but “price expectations”.
“I think bitcoin … is likely to rise 50% to 100% from here in the next 12 to 18 months. And if you asked me the above or below, I would definitely say that it would be much more likely to be higher than lower” , he said.
Volatility as the norm
Bitcoin has undergone dramatic corrections in the past, and Miller has warned investors that cryptocurrency volatility is unlikely to disappear anytime soon, even with more institutional investors supporting it. “I think if you can’t get that, you probably shouldn’t have bitcoin,” he said.
“Bitcoin tends to move in spurts, which tend to be followed by corrections,” added Miller. “I think there were three 80% corrections, which is normal in this type of very early technology with a very, very large total addressable market.”
The price of bitcoin experienced a sharp rise, especially during the fall and new year. Since September 1, the value of the digital currency has increased by around 230%.
The increased adoption of institutional investors was credited with helping to fuel the increase, with names like Paul Tudor Jones and Stanley Druckenmiller launching bitcoin as a strong hedge against inflation. BlackRock’s Rick Rieder in November introduced it as a potential alternative to gold.
Miller, meanwhile, has owned the cryptocurrency for years.
In January 2018, Miller told CNBC that he started buying bitcoin around 2014 or 2015 at an average cost of $ 350 per currency. At that time, he said he transferred his bitcoin holdings to a separate fund. On Friday, Miller said it was still the case, but explained that he hopes to make changes to the rules to make it easier to own his primary funds.
“We own bitcoin in a partnership that my partner, Samantha McLemore, recently founded called Patient Capital, and is a position of about 5% there,” he said. “We don’t have it at the bottom because it is very, very difficult to do that. We are now examining the regulatory aspects of this and considering that the SEC will give us authorization to do this in our funds. “