Bill Miller, the founder and chief information officer (CIO) at Miller Value Partners, a Baltimore, Maryland-based investment management firm, has said bitcoin (BTC) could potentially be very valuable. Miller however, cautioned investors that the flagship cryptocurrency may also tank to zero.
Bitcoin Is Interesting Because It’s “Not Correlated” To Traditional Market Assets
During an interview with CNBC (on January 7th), Miller remarked:
I like bitcoin because it’s not correlated with [the traditional stock market]. It does have the potential to be worth a lot, and the potential to be worth zero.
When digital currency prices reached their all-time highs in December 2017, Miller’s firm invested $1 billion in bitcoin. As CryptoGlobe reported in late July 2018, the 68-year-old Miller revealed he had invested a “big chunk” of his assets (around 1% of his personal net worth) in bitcoin. However, the experienced portfolio manager said he had scaled back his company’s allocation to digital assets due to the uncertainty created by the extended crypto bear market.
Bitcoin Is Still “An Intellectual Experiment”
Last year, Miller had said bitcoin was “interesting” and that it had a fair chance of achieving mainstream adoption as a store-of-value (SoV). Miller had also pointed out that he thinks most altcoins are “probably worthless.” Expressing views similar to those of Wences Cesares, the CEO of Xapo, a cold storage solutions provider for cryptos, Miller has referred to bitcoin as an “interesting technological experiment.” He has recommended that all investors should try to learn more about bitcoin.
However, Miller clarified that he’s not bullish on bitcoin as there’s a chance it may be worth nothing in the foreseeable future. According to the former research director at Legg Mason Capital Management, there’s no correlation between the performance of traditional stock market assets and bitcoin’s price movements. This is what he likes most about the pseudonymous cryptocurrency.
Bitcoin basically has no statistical correlation with stocks or bonds, which makes it an excellent diversifier.
As covered, Anthony Pompliano, a well-known crypto analyst and partner at Morgan Creek Digital Assets, has also said that bitcoin (BTC) is still a “non-correlated asset.”
No Correlation With Traditional Assets
Pompliano, an economics and sociology graduate from Bucknell University, explained that “if [we] look at the correlation between” bitcoin and the S&P 500 (US stock market index based on the market cap of the 500 largest NYSE or Nasdaq-listed firms) over the past 6 months, then “it’s at zero.”
He also mentioned that “if we look at the Dow index” (Dow Jones Industrial Average), its correlation with BTC is “near zero.” This clearly “proves” that bitcoin is “not correlated”, Pompliano noted. His firm “expects [this] to continue”, but still only recommends investing about “1 to 2% into bitcoin.”