Jeffrey Gundlach, CEO of DoubleLine Capital, warned on Monday that bitcoin could overheat after its massive run in recent months.
“I don’t like bitcoin here. I don’t like things on stilts like that,” said the so-called Bond King on CNBC’s “Halftime Report.” “Bitcoin, for me, is now in kind of a bubble area in terms of the way it behaves.”
Gundlach’s comments came on Monday as the price of bitcoin fell sharply to less than $ 33,000 per digital coin. The cryptocurrency hit a record high of nearly USD 42,000 on Friday before starting to pull back. However, Bitcoin is still up more than 75% in the last month and more than 380% since April 1.
The big surge in bitcoin took place against the backdrop of the coronavirus pandemic, with governments around the world unleashing massive stimulus measures to help ailing economies. That has sparked inflation problems for some investors, and bitcoin is one of the assets they’ve turned to.
The increased adoption of bitcoin in general by institutional investors is another factor attributed to driving the rise. And some people, like prominent value investor Bill Miller, believe the digital currency has more room to run, while admitting that volatility is likely to persist.
“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,” Miller told CNBC on Friday. “As long as that is achieved, bitcoin is likely to go higher and perhaps significantly higher.”
Gundlach acknowledged there is a possibility that bitcoin bulls will be proved right.
“The people who point out that it has a tremendous dynamic between supply and demand are right when institutions get involved,” said Gundlach. “That’s what can create these massive moves in bitcoin.”
In January 2020, Gundlach predicted a short-term rise for bitcoin, possibly as much as $ 15,000 per coin in the year.
In other cases, the investor has taken a more negative stance. For example, in December 2017, Gundlach said, “If you go short on bitcoin today, you make money.” At the time, bitcoin was trading more than $ 16,000 per coin. It would drop dramatically, losing more than half of its value by December 2018.
Gundlach, explaining his current stance on bitcoin, said Monday he was concerned that investors have become overly optimistic.
“I think all these things are kind of ingrained at the moment, and the trading location is bad,” he said. “Even the dollar, I’ve been very negative on the dollar since January 2017, but I’ve actually become neutral to the dollar, a little lower than where we are now … just because these things seem to have gotten deep in the consensus story . “
“There are times when … people seem so on one side of the boat that I really don’t believe the boat can sell that well,” added Gundlach, “and I believe bitcoin is on the bullish side there. is. direct. “