Bitcoin [BTC] can be a ‘potential asset’ for central banks, says Wall Street billionaire Bill Miller
Bill Miller, a billionaire investor, stated that Bitcoin [BTC] is the cryptocurrency which has the most probability of being successful. He also spoke about the strategies for evaluating the value of the cryptocurrency.
Miller, who is described as being a "Bitcoin observer", spoke to Bloomberg in an interview earlier this week. He elaborated upon his holdings in Bitcoin, stating:
"I have Bitcoin in a partnership that I run and I also have a pretty significant position individually with an average cost of $300 in Bitcoin."
He went on to call it an "interesting technological experiment". Notably, the billionaire managed a trust fund on Wall Street called Legg Mason Value Trust fund. Under his management, the fund 'beat the market' from 1991 to 2005, demonstrating 15 years of returns greater than that of the S&P 500 index. He entered the cryptocurrency space during 2014 or 2015, where the average cost of the coin was about $350. On Bitcoin, the investor said:
"We don't know how it's going to come out but right now it's much less risky than it was when it was [worth] $100."
Even as he believes that there is a possibility of the coin going to 0, he stated that every day that it doesn't happen or get "regulated out of existence", and that there will be more money flowing into the ecosystem. He went on to say:
"…more people are looking at it there's only 17 million Bitcoin outstanding in the world. There are 23 to 25 million millionaires in the world. If every millionaire said I want one Bitcoin, the price would go non-linearly higher."
The cryptocurrency market is extremely fragmented, with Miller quoting the number of discrete tokens at around 1600. He made a sweeping statement regarding these 'altcoins', saying that "most of them are probably worthless". He said:
"Bitcoin is the most stable, it has the greatest probability of being successful. There's some other ones that people like, but Bitcoin is the one I'm really focused on."
On precisely measuring the value of the coin, Miller accepted that there were several different ways of doing so. He spoke at length about his method of evaluating it, quoting an article published on his website. The article in question states:
"We think Bitcoin could have enormous upside if it catches on, but we acknowledge that numerous hurdles mean that it is more likely than not that the experiment fails. Still, it is important to think about how valuable Bitcoin could be if the adoption continues to grow and the currency thrives. The grandest dream for Bitcoin would be for it to achieve the store-of-value status of gold."
Miller stuck to this style of thinking when he said:
"At this point, the best way to think about Bitcoin is as a non-correlated asset most similar to gold, except its much more easily transportable than gold, it can actually be used to buy things."
He posed a question as to what percentage of the gold market Bitcoin could capture. He even said that the gold market is one of the many use-cases for the currency, stating that its status as a payment system or a viable currency is not realized "yet". He even predicted the future of adoption for the currency, saying:
"If it becomes much more valuable its then likely that various central banks begin to think of it as another potential asset just like they hold gold. That would open up the market extremely significantly."
Miller offered budding investors tips for getting into the market through a fund. The key to investing in Bitcoin is "proper portfolio positioning and sizing", said Bill. Moreover, one should look at whether the coin was investment worthy or viable. Furthermore, he stated:
"We made it in the partnership position around 5%. The idea was that it's unlikely to go down more than 50-60% a year, that'll cost us 2.5% in the partnership. Thats a reasonable loss.
Interestingly, the Wall Street lion said in January that he split off most of his Bitcoin investment into a separate fund. He moved 90 percent of his main fund's Bitcoin holdings to a separate fund, keeping the main fund with a 10% weighting in Bitcoin and Bitcoin Cash. On his investment, he said:
"I put about 1% of my liquid net worth [into Bitcoin]. Its very rare that you could buy something with 1% of your assets and that it could become 10 or 20 or 50% in a few years."
He compared the coin to a "lottery ticket", bestowing it with an analogy of a "positive expectation lottery ticket".
Twitter user boyplunge said:
""A positive expected value lottery ticket" is a brilliant analogy. And also too "alt coins are rubbish"
Twitter user canomaly stated:
"When the majority of alts were made for markets and pumps & dumps without any real value/use case. Even stocks are lottery tickets in some way if you look at it."