Bill Miller, a longtime value investor, told CNBC on Tuesday that he believes bitcoin is firmly entering the mainstream, claiming that the cryptocurrency’s rally in recent months is significantly different from 2017’s rise and subsequent plunge.
In an interview on “The Exchange,” Miller Value Partners founder and chief investment officer said he believes bitcoin still has room to run upwards. The largest cryptocurrency in the world by market value traded around $ 55,800 on Tuesday afternoon. According to Coindesk, the year is already up around 90% so far.
“Delivery [of bitcoin] grows 2% per year and demand is growing faster. That’s all you really need to know, and that means it’s going higher, ” says Miller, who first started buying bitcoin around 2014 or 2015 at an average cost of $ 350 per coin.
However, he acknowledged that the historically volatile bitcoin is likely to continue to experience sharp price swings, such as those that occurred over the weekend, bringing the digital currency below $ 60,000. Last week, it hit a record high of nearly $ 65,000.
Miller said the 2017 rally was basically a bubble that eventually burst. It’s different now, he argued, saying, “I don’t think this is a bubble in bitcoin. I think this is now the beginning of a mainstreaming of it.”
Bitcoin saw its price rise in 2017, reaching an all-time high of nearly $ 20,000 in December. It declined sharply over the following months, losing about 80% of its value in what became known as the “crypto winter”.
“Even then, during the bubble, it fell 20% on five separate occasions, so with bitcoin, volatility is the price you pay for performance,” added Miller, who managed a fund that beat the S&P 500 for 15 consecutive years at Legg. Mason.
Bitcoin traded below USD 11,000 in October, but its rally gained steam in the fall and carried over into 2021.
Institutional adoption has been cited as a factor in bitcoin’s rise, with companies like Tesla buying the digital currency with cash on the balance sheet. A few major Wall Street banks – Morgan Stanley and Goldman Sachs – are also taking steps to provide asset management clients with exposure to bitcoin.
Miller said he shares the belief of other crypto bulls that bitcoin is “digital gold.”
Scarcity is a fundamental characteristic of bitcoin, with a total supply of up to 21 million tokens. Currently, there are 18.69 million bitcoins in circulation, according to Coindesk. New bitcoins enter the market as a reward for so-called miners, who use powerful computers to verify transactions across the decentralized network.
“Gold is an asset class of about $ 10 trillion and bitcoin is $ 1 trillion, and it’s infinitely divisible or almost like that,” 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, as a store of value, than gold.”