Weekly Bitcoin Review

Bill Miller allocates 50% of portfolio towards Bitcoin

In his WealthTrack interview last Friday, Bill Miller shared his thoughts on Bitcoin. At the end of the interview, the long time value investor states that Bitcoin provides a “service of insurance against financial catastrophe that no one else can provide.” He then stated that he has allocated 50% of his investment portfolio into Bitcoin and other Bitcoin related assets, like MicroStrategy. He claims to now be a Bitcoin bull instead of just an observer. Even with the current fear in the market over Bitcoin, he is still bullish in the long-term.

Store of wealth

Many who buy Bitcoin view it as a great store of value, meaning that they don’t sell it regardless of the price going up or down. Instead, they see Bitcoin as a safe investment, because it is nearly impossible for the network to be hacked or disrupted due to the Proof-of-Work consensus protocol it runs on and the extensive size of the network. Bitcoin has outperformed the S&P 500 and gold by a tremendous percentage in the last decade. Earlier today, Bitcoin briefly dipped below $40,000, before returning to the $41,500-42,000 range it has sat at for a couple days. Many who have been in Bitcoin for a year or more have seen more considerable price dips than the current several times. They understand that any healthy asset will have its ups and downs, and there is little cause for concern with the current price action.

Patience

Towards the last few months of 2021, there was considerable buzz about Bitcoin ending in the $100,000 range. All these hopes were dashed when it ended up closing the year under $50,000. Lots of smaller investors got into Bitcoin above $50,000 with hopes of seeing monumental gains in a short amount of time, and were soon humbled. Greed plays a major factor in the price movements of crypto assets like Bitcoin. People don’t get into the asset until there’s already hype around the price movement, and by then short term investors who already have made a profit are looking for an out. As the price continues to rise, more people buy into the hype, and end up feeling major disappointment when the price doesn’t perform how they want it to. Experienced investors and large institutions understand that this is a fundamental aspect of the market, and use it to their advantage.

Patience is a virtue that many lack when it comes to Bitcoin and similar investments. The current bear run is a perfect example of this. Almost all of the major institutional investors continue to hold their stake, or have added to it. Lots of the selloff is from retail investors who invested more than they were willing to lose and are trying to cut their stake to minimize losses.

Our article from earlier this week explains the recent weekly price drops in more detail.

DISCLOSURE: Elijah Pollack holds Bitcoin.