Bitcoin Could be 'Worth A Lot' or 'Worth Zero', Says Billionaire Hedge Fund Manager

Omar Faridi

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.

Miller argued: 

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.”

IBM’s VP of Blockchain and Crypto on World Wire, XLM, Ripple, XRP, and BTC Price

On Wednesday (February 20th), during an interview with Australia's largest comparison site, Jesse Lund, IBM's Vice President of Blockchain and Digital Currencies, talked about his company's cross-border payments solution "IBM Blockchain World Wire"(which runs on the Stellar network), how this product differs from what Ripple is doing with xRapid, and gave his medium term (end of 2019) and long term (some day) price predictions for Bitcoin (BTC).

In this article, we focus on some of Lund's most interesting comments made during this interview.

IBM Blockchain World Wire

"The architecture of World Wire is really a cross-border payment network, the magic of which is the ability to send a payment message instruction saying 'Hey, I'm sending you something; get ready!' and on the other end, the receiver is making sure that who you are sending it yo is not some nefarious actor or bad actor, but once that happens, and that happens really fast, then we send the value along, and that transfer of value is made possible by an ecosystem of digital settlement instruments, of which [Stellar] lumens is one."

"IBM's long game in this is to be the network operator... So, the subscribers, the customers, if you will, of World Wire are market makers who really provide the pay in, pay out locations, and they themselves have corporate clients and probably retail clients. So, we're really providing a kind of conduit through which money can flow in real-time." 

IBM Blockchain World Wire vs. Ripple's xRapid

"Credit Ripple for the vision of using a digital asset in order to enact immediate settlement with finality. I think their implementation followed one path. Our implementation is a little bit different. We are not the issuer of an asset. In fact, what we believe is that there should be an ecosystem of a variety of digital assets that provide the settlement instruments that enable these cross-border payments. The participants on the network should be able to choose and negotiate their choices in real-time and the pricing might be different depending on the settlement instrument you use. So, I think with Ripple, they're looking at XRP as the primary digital asset for settlement, and for us, it could be lumens, it could be Ripple, it could be XRP even, it could be Bitcoin, but it would also probably include other instruments like stablecoins and even eventually, hopefully soon, central bank issued digital currencies."

Bitcoin (BTC) Price Prediction

"[Bitcoin's price at the end of 2019] ... I think it's going be higher [than today], I'll go with $5,000, but let me just say this. I've got a long term outlook... I see Bitcoin at a million dollars some day. And I like that number because if Bitcoin is at a million dollars, then satoshi is on value parity with the U.S. penny, right? And that means there's $23 trillion of liquidity in this network. Think about $23 trillion in liquidity and how that changes things like corporate payments, large payments, and what that does to the financial services landscape."

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