Mutual fund titan Bill Miller is back on Bitcoin.
“One of the interesting things about Bitcoin is that the higher it goes, the riskier it gets,” Miller told CNBC on Friday. “That’s the opposite of what happens with most stocks.”
Miller continued to describe Bitcoin as “a supply and demand story” with around 900 bitcoins being created every day and a swarm of retail and institutional investors taking in enormous amounts of the available supply.
Some of those big investments came from companies like MicroStrategy, which bought more than 70,000 BTC with plans to buy more, and London-based wealth manager Ruffer Investment, which put $ 740 million in bitcoin in late 2020.
Payment companies like Square and PayPal are also redirecting retail capital to Bitcoin. For example, in the third quarter of 2020, Square had record sales of $ 1 billion through its Cash mobile wallet app. After PayPal announced in October that it would support Bitcoin and other cryptocurrencies, PayPal immediately removed its waiting list for the service less than a month later, citing the overwhelming demand.
“For those waiting to pull out, they got it in the first quarter. You could have bought Bitcoin for $ 4,000 in the first quarter, “said Miller, referring to the almost 50% intraday crash of Bitcoin in March 2020.
Given Bitcoin’s more than 300% rally in 2020, which was up another 40% as early as 2021, Miller said the price for those returns was the volatility of the asset.
“Expect it to be very, very volatile,” Miller told CNBC. “If you can’t stand the volatility, you probably shouldn’t have it. But its volatility is the price you pay for its performance. “
Still, Miller said earlier this week that he thinks the markets are undervaluing Bitcoin’s value proposition as a potential inflation hedge, calling it the “rat poison” of cash, a term Warren Buffett famously used for Bitcoin with an entirely opposite connotation.