Bill Miller says bitcoin becomes less risky the more the price goes up


Value investor Bill Miller said on Friday that he believes owning bitcoin becomes a safer investment decision the more the digital coin’s price rises.

Bitcoin was trading over $ 40,000 per coin on Friday afternoon, after setting a record high of nearly $ 42,000 earlier today. Cryptocurrency has been in tears since March, coinciding with governments around the world undertaking massive stimulus efforts to offset the effects of the coronavirus pandemic.

“It gets less risky as it goes up” because it’s still early in the adoption cycle, Miller said on “The Exchange.” “It’s the opposite of what happens with most stocks.”

“The total supply of Bitcoin is increasing by less than 2% per year and it is evident from the price that the demand is increasing much, much faster than that. As long as this happens, bitcoin is likely to rise and maybe considerably higher, ”Miller added. , Founder and Chief Investment Officer of Miller Value Partners.

Miller, who managed a fund that beat the S&P 500 for 15 straight years at Legg Mason, said he didn’t have a specific price target for bitcoin, but instead had “expectations of price”.

“I think bitcoin … is probably expected to rise 50% to 100% within the next 12-18 months. And if you were to ask me the most or the least, I would definitely say it would be much more likely to be. higher than lower, ”he said.

Volatility as the norm

Bitcoin has undergone dramatic corrections in the past, and Miller has warned investors that cryptocurrency volatility is unlikely to go away anytime soon, even as more institutional investors are backing it. “I think if you can’t take this you probably shouldn’t own bitcoin,” he said.

“Bitcoin tends to move in spurts, which tend to be followed by corrections,” Miller added. “I think there were three 80% fixes, which is normal in this very, very early type of technology with a very, very large addressable market overall.”

The price of bitcoin has seen a sharp rise, especially in the fall and into the new year. Since September 1, the value of the digital coin has increased by approximately 230%.

The increased adoption by institutional investors helped fuel the rise, with figures like Paul Tudor Jones and Stanley Druckenmiller presenting bitcoin as a solid hedge against inflation. BlackRock’s Rick Rieder in November pitched it as a potential alternative to gold.

Miller, for his part, has owned the cryptocurrency for years.

In January 2018, Miller told CNBC he started buying bitcoin around 2014 or 2015 at an average cost of $ 350 per coin. At that time, he said he had transferred his bitcoin holdings to a segregated fund. Miller said on Friday that was still the case, but explained that he hoped to make changes to the rules to make it easier to hold his core funds.

“We own bitcoin in a partnership that my partner, Samantha McLemore, recently started called Patient Capital, and which is about 5% of that,” he said. “We don’t have it in the fund because it’s very, very difficult to do. We are currently looking at the regulatory aspects of this and are considering the SEC giving us the green light to do it in our funds.”

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