Value investor Bill Miller said on Friday that he believes owning bitcoin will become a safer investment decision as the price of the digital currency rises.
Bitcoin traded more than $ 40,000 a coin on Friday afternoon after hitting a record high of nearly $ 42,000 earlier in the day. The cryptocurrency has been in a tear since March, coinciding with governments around the world taking massive stimulus efforts to offset the effects of the coronavirus pandemic.
“It gets less risky as it gets higher” because it’s still early in the adoption cycle, Miller said on “The Exchange.” “That’s the opposite of what happens with most stocks.”
“The total supply of Bitcoin is growing at less than 2% per year and it is clear from the price that demand is growing much, much faster. As long as that rises, bitcoin is likely to get higher and perhaps significantly higher,” Miller added. , founder and chief investment officer of Miller Value Partners.
Miller, who managed a fund at Legg Mason that beat the S&P 500 for 15 consecutive years, said he had no specific price target for bitcoin, but rather “price expectations.”
“I think bitcoin … should probably rise 50% to 100% from here in the next 12 to 18 months. And if you were to ask me over or under, I would certainly say it is much more likely to be higher than lower, ”he said.
Volatility as the norm
Bitcoin has undergone dramatic corrections in the past, and Miller warned investors that the cryptocurrency’s volatility is unlikely to go away anytime 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 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 very, very large total addressable market.”
The price of bitcoin has seen a solid rise, especially during the fall and into the new year. Since September 1, the value of the digital currency has increased by about 230%.
Increased adoption by institutional investors has been credited with helping the rise, with the likes of Paul Tudor Jones and Stanley Druckenmiller throwing bitcoin as a strong hedge against inflation. BlackRock’s Rick Rieder hailed it as a possible alternative to gold in November.
Miller, for his part, 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 coin. At the time, he said he had moved his bitcoin holdings to a separate fund. On Friday, Miller said this was still the case, but explained that he hopes to make changes to the rules to make it easier to own in his primary funds.
“We own bitcoin in a partnership that my partner, Samantha McLemore, recently started Patient Capital, and it’s about a 5% position in it,” he said. “We don’t have it in the fund because it’s very, very difficult to do that. We’re now looking at the regulatory aspects of that and considering letting the SEC give us the green light to do that in our funds.”