Bitcoin likely to go ‘considerably higher’: Investing star Bill Miller

A day after calling bitcoin ‘rat poison’ for cash Miller said that the cryptocurrency ‘gets less risky the higher it goes’

United States investor, fund manager, and philanthropist Bill Miller said he believes that unlike most assets, Bitcoin (BTC) becomes a safer investment as its price gets higher.

During a CNBC interview published on Jan. 8, Miller said that he believed bitcoin becomes less risky as its price increases. When the interviewer asked him if he is as excited about the coin as he was in early November—when it was worth under $15,000—he answered:

“Absolutely. One of the things that’s interesting about Bitcoin is that it gets less risky the higher it goes, and that’s the opposite of what happens with most stocks.”

Miller explained that since bitcoin is early in its adoption cycle, none of the major banks offer custody services that support it or sell it. And that’s regardless of the fact that they are allowed to, as the U.S. Treasury Department’s Acting Comptroller of the Currency, Brian Brooks, announced in a letter in July.

Miller said he believes that those institutions have not deployed custody services because “they’re concerned.” Furthermore, he provided some reasons why he believes that bitcoin is an asset with great potential:

“Bitcoin is a supply and demand story, there’s 900 new Bitcoins created every day. It is estimated that PayPal and Square alone—their customers—are buying all of those and Bitcoin’s total supply is growing less than 2% a year,” he said. “It’s obvious by the price that demand is growing much much faster than that.” As long a that remains true, he added:

“Bitcoin is likely to go higher, perhaps considerably higher.”

An analysis by crypto venture capital firm Panthera Capital suggests that PayPal was “already buying almost 70% of the new supply of Bitcoins” on Nov. 20. And that’s in a situation where Square’s Cash App was already estimated to be buying around 40% of all newly-issued Bitcoin, meaning that the two firms are buying 10% more BTC than the miners are creating. 

A month later, in mid-December, a report suggested that PayPal’s customers alone were buying Bitcoin faster than miners produce it.

As any market participant would expect, how much higher is a question that Miller had a much less clear cut answer to. Instead, he explained that Bitcoin moves in spurts followed by corrections, so movements like the ones we are currently seeing should be expected.

Miller is a major Bitcoin proponent in the traditional finance world. Earlier this week, he even suggested that Bitcoin could kill cash. In his Q4 2020 market letter published on Jan. 5 on the blog of its venture capital firm Miller Value Partners, he said that “[i]f inflation picks up, or even if it doesn’t, and more companies decide to diversify some small portion of their cash balances into Bitcoin instead of cash, then the current relative trickle into Bitcoin would become a torrent.” He added:

“Warren Buffett famously called bitcoin ‘rat poison.’ He may well be right. Bitcoin could be rat poison, and the rat could be cash.”

In May 2018, Berkshire Hathaway CEO Buffett cemented his reputation as a Bitcoin skeptic when he said that bitcoin “is probably rat poison squared.”

The whole last paragraph of Miller’s letter is devoted to Bitcoin, which he defined as “the best performing asset category in 2020.” 

He pointed out that it outperformed all major assets over the past one, three, five, and 10 years, and that its “market capitalization is greater than JPMorgan and greater than Berkshire Hathaway and yet it is still very early in its adoption cycle.” 

Miller also argued that while Bitcoin is often called digital gold, it has several advantages over its physical counterpart:

“Bitcoin at this stage is best thought of as digital gold yet has many advantages over the yellow metal.”

This last comment is remarkably similar to what U.S. investor Anthony Scaramucci—who was very briefly White House Communications Director—recently said. As Modern Consensus reported on Jan. 7, Scaramucci also suggested that Bitcoin is superior to gold:

“Bitcoin is better at being gold than gold is at being gold. […] It’s easier to store, it’s harder to steal, it’s more portable, and so therefore, it’s become the ledger or the storage of the future in terms of the storage of value.”

Those two Wall Street heavyweights getting on board with Bitcoin are not the exception., That opinion  is actually becoming quite common. According to mid-December reports, the participation of institutional investors and well-known investors is what many industry analysts and observers believe differentiates this Bitcoin bull run from previous ones.

Other investors who joined the rank of Bitcoin proponents—and publicly admitted to investing in this asset—include American investor, hedge fund manager and philanthropist Stanley Freeman Druckenmiller and the  billionaire who predicted the 1987 market crash, Paul Tudor Jones. Finance tycoons from outside the United States are also buying into Bitcoin, among them Mexican billionaire Ricardo Salinas Pliego.

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Adrian is a newswriter based out of Pisa, Italy. He's passionate about cryptocurrency, digital rights, IT, tech and futurology and likes to think about the future in a positive way.