Bitcoin Is A Great Diversifier
Bill Miller, the chief of investment at American fund manager Miller Value Partners, recently appeared on CNBC’s “The Exchange” segment to discuss his thoughts on the cryptocurrency industry, along with his investment thesis regarding Bitcoin (BTC). Miller (69), worth purported dozens of millions, explaining that firstly, he doesn’t believe that anybody necessarily “needs” exposure to cryptocurrencies.
Tune in today to @CNBC for our new show @CNBCTheExchange with Kelly Evans at 1pmET. We’ll be speaking with value investor Bill Miller, Miller Value Partners CIO
— The Exchange (@CNBCTheExchange) January 7, 2019
However, he added that from a statistical standpoint, the price action of Bitcoin has a close-to-zero correlation with traditional equities, including American stocks, bonds, or other vehicles of a similar caliber. Miller noted that this in and of itself makes BTC a “great diversifier,” and a staple for investors looking for diversification.
Miller isn’t the only crypto investor to see Bitcoin’s non-correlated nature as a positive catalyst. On Boxing Day, Anthony “Pomp” Pompliano sat down with CNBC’s Squawk Box to claim that the correlation between BTC and the S&P 500 is near-zero, citing data from Morgan Creek Digital Assets. The investor even added this is much of the same with the U.S. dollar index.
Pomp noted that forward-thinking investors should allocate one or two percent of their investable assets into Bitcoin, likely touching on the asymmetric risk/return profile that has become crypto’s de-facto calling card.
Miller also backed his non-correlation claim with data, specifically drawing attention to the cryptocurrency market’s and the equity market’s performance in the past 24 months. The American fund manager noted that as BTC peaked in late-2017, stocks, like Apple (AAPL), Amazon (AMZN), among many others, continued to head higher, adding that this accentuates crypto’s negative correlation.
Bitcoin Is An Interesting Technological Experiment
From another fundamental viewpoint, Miller noted that for the longest time, he’s been stating that “Bitcoin is an interesting technological experiment” with potential “to be worth a lot.” The seeming crypto proponent isn’t the only individual touting this thought process.
As reported by Ethereum World News previously, one of this industry’s finest, Xapo founder and CEO Wences Casares, told Bloomberg TV that the world’s first cryptocurrency is nothing more than an “interesting intellectual experiment.” As the term “experiment” implies, Casares is essentially pointing out that Bitcoin, in all its decentralized glory, may fail miserably or succeed. He explained that not only could there be flaws in Bitcoin’s code base, but that in the future, there could be technological innovations that undermine certain aspects of blockchain networks,
However, Casares, like Miller, noted that the decentralized store of value and transactional settlement layer has potential. The Xapo chief noted that the cryptocurrency industry at large was like the Dotcom industry during 1992, adding that those utilizing this technology are just revving up their motors, so to speak. And if the race starts well, Casares explained that Bitcoin could become a “non-political global standard of value and it’s a non-political global standard of settlement.
Title Image Courtesy of John Towner Via Unsplash
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