In a recent report, Miller Opportunity Trust, one of the funds offered by investment firm Miller Value Partners, said that Bitcoin has the potential to become a form of digital gold. 

Legendary American value investor William H. Miller III is the Founder, Chairman, and Chief Investment Officer of Miller Value Partners.

Before starting Miller Value Partners, Bill Miller and Ernie Kiehne founded Legg Mason Capital Management, and they worked as portfolio managers of the Legg Mason Capital Management Value Trust from its inception in 1982.

It is important to point out that Miller is not your average fund manager. As CNBC noted back in June 2018, Miller’s 15-year streak (through 2005) of beating the is S&P 500 is still a benchmark no active manager can touch.”

Miller Opportunity Trust is “a flexible, value fund with a contrarian bent for investors thinking about the long term.” It is managed by Bill Miller and Samantha McLemore.

According to a new investor report, the Miller Opportunity Trust fund used Bitcoin’s price crash in May as an opportunity to invest in the asset via the Grayscale Bitcoin Trust (GBTC).

The report said the fund had been observing Bitcoin for a “long time” and received approval to invest in GBTC during the last quarter. The fund utilized Bitcoin’s falling price to trade one of the trust’s “larger discounts to its underlying holding in Bitcoin” thereby creating upside potential. 

The investor report also noted Bitcoin’s utility as a form of “digital gold” and said it was positioned to appreciate favorably when compared to gold’s market capitalization: 

We believe Bitcoin has significant upside potential as a form of ‘digital gold’. With gold’s market capitalization greater than $11 trillion, Bitcoin’s current cap close to $600 billion would have a long way to go to catch up. 

The fund, which holds $2.8 billion in assets, said the market for Bitcoin was early in a continuing adoption curve, resulting in price volatility. However, the report concluded that the risk-reward for Bitcoin is “attractive” given the upside potential. 

In his “4Q 2020 Market Letter” (published on January 5), Miller had this to say about Bitcoin:

The Fed is pursuing a policy whose objective is to have investments in cash lose money in real terms for the foreseeable future. Companies such as Square, MassMutual, and MicroStrategy have moved cash into bitcoin rather than have guaranteed losses on cash held on their balance sheet. Paypal and Square alone are estimated to be buying on behalf of their customers all of the 900 new bitcoins mined each day.

Bitcoin at this stage is best thought of as digital gold yet has many advantages over the yellow metal. If inflation picks up, or even if it doesn’t, and more companies decide to diversify some small portion of their cash balances into bitcoin instead of cash, then the current relative trickle into bitcoin would become a torrent. Warren Buffett famously called bitcoin ‘rat poison’. He may well be right. Bitcoin could be rat poison, and the rat could be cash.

Then, on January 8, during an interview with Kelly Evans on CNBC’s “The Exchange”, Miller had this to say about Bitcoin’s price volatility:

You have to expect that it’s going to be very, very volatile… If you can’t take the volatility, you probably shouldn’t own it. But its volatility is the price you pay for its performance.


The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.

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