Years-long value investor Bill Miller told CNBC on Tuesday that he believes bitcoin is entering the mainstream strongly, and believes the rise of the cryptocurrency in recent months differs significantly from the 2017 ascension and the subsequent plunge.
In an interview on “The Exchange”, the founder and chief investment officer of Miller Value Partners said he believes bitcoin still has room to run on its head. The world’s largest cryptocurrency by market value traded around $ 55,800 on Tuesday afternoon. According to Coindesk, it has risen about 90% annually so far.
“Supply [of bitcoin] growth by 2% per year and demand is growing faster. That’s all you really need to know, and that means it’s going higher, ” said Miller, who first started buying bitcoin in 2014 at an average cost of $ 350 per coin.
However, he acknowledged that the historically volatile bitcoin was likely to continue to experience sharp price fluctuations, such as the one that took place over the weekend, beating the digital currency below $ 60,000. Last week, it peaked at nearly $ 65,000.
Miller said the rally in 2017 was in fact a bubble that finally burst. It’s different now, he argued, saying, “I don’t think it’s a bubble in bitcoin. I think it’s now the beginning of a mainstream of it.”
Bitcoin raised its price in 2017 and reached the then record high of almost $ 20,000. It fell sharply in the ensuing months, losing about 80% of its value in what became known as the ‘crypto-winter’.
“It declined by 20% during the bubble on five different occasions at the time, so with bitcoin, volatility is the price you pay for performance,” added Miller, who managed a fund that ran the S&P 500 for 15 consecutive years. knocked while at Legg. Freemason.
Bitcoin recently traded below $ 11,000 in October, but its rally gained steam in the fall and carried over to 2021.
Institutional adoption is cited as one factor for the rise of bitcoin, and companies like Tesla buy the digital coin with cash on its balance sheet. A few key 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 of other cryptocurrencies that bitcoin is ‘digital gold’.
Scarcity is a fundamental feature of bitcoin, with a total offering of 21 million tokens. According to Coindesk, there are currently 18.69 million bitcoins in circulation. New bitcoins are entering the market as a reward for so-called miners, who use computers with great power to verify transactions in the decentralized network.
“Gold is about a $ 10 trillion asset class and bitcoin is $ 1 trillion, and it’s infinitely divisible or nearly so,” Miller said. “It’s easy to transport and can be shipped anywhere in the world if you have a smartphone, so it’s a much better version than gold than a store.”