Longtime value investor Bill Miller told CNBC on Tuesday he believes bitcoin is firmly entering into the mainstream, contending the cryptocurrency’s rally in recent months is significantly different from its 2017 ascension and subsequent plunge.
In an interview on “The Exchange,” the founder and chief investment officer of Miller Value Partners said he believes bitcoin still has room to run to the upside. The world’s largest cryptocurrency by market value traded around $55,800 on Tuesday afternoon. It’s already rallied around 90% year to date, according to Coindesk.
“Supply [of bitcoin] is growing 2% a year and demand is growing faster. That’s all you really need to know, and that means it’s going higher,” said Miller, who first started to buy bitcoin around 2014 or 2015 at an average cost of $350 per coin.
However, he acknowledged the historically volatile bitcoin will likely continue to experience sharp price swings, like the one that transpired over the weekend, knocking the digital coin below $60,000. Last week, it reached an all-time high of almost $65,000.
Miller said the rally in 2017 was, in fact, a bubble that ultimately burst. It’s different now, he argued, saying, “I don’t think this is a bubble at all in bitcoin. I think this is now the beginning of a mainstreaming of it.”
Bitcoin saw its price soar in 2017, reaching what was then a record high of nearly $20,000 that December. It went on to fall sharply in the following months, losing about 80% of its value in what’s become known as the “crypto winter.”
“Even back then during the bubble, it went down 20% on five different occasions so with bitcoin, volatility is the price you pay for performance,” added Miller, who managed a fund that beat the S&P 500 for 15 straight years while at Legg Mason.
Bitcoin traded below $11,000 as recently as October, but its rally gained steam in the fall and carried over into 2021.
Institutional adoption has been cited as one factor for bitcoin’s rise, with companies such as Tesla buying the digital coin using cash on its balance sheet. A pair of major Wall Street banks — Morgan Stanley and Goldman Sachs — also are taking steps to provide wealth management clients exposure to bitcoin.
Miller said he shares in the belief held by other crypto bulls that bitcoin is “digital gold.”
Scarcity is a fundamental characteristic of bitcoin, with its total supply capped at 21 million tokens. Currently, there are 18.69 million bitcoins in circulation, according to Coindesk. New bitcoins come into the market as a reward for so-called miners, who use high-powered computers to verify transactions across the decentralized network.
“Gold is about a $10 trillion asset category and bitcoin is $1 trillion, and it’s infinitely divisible or almost so,” Miller said. “It’s easily transportable and can be sent anywhere in the world if you have a smart phone so it’s a much better version, as a store of value, than gold.”