In his latest blog mail Under the headline “Why I'm Still Betting on Bitcoin,” financial expert and seasoned investor Bill Miller IV, CFA, CMT, Chairman and CEO of Miller Value Partners, reiterated his bullish stance on Bitcoin. According to Miller, who is chairman and CIO of Miller Value Partners and son of legendary investor Bill Miller III, Bitcoin is still in the early stages of a secular shift in views of capital and global governance.
Bitcoin: It's still early days
Miller's analysis begins by considering the thesis he first presented in 2015 in his paper, “The Value Investor's Case for…Bitcoin?!”. He said Bitcoin had potential far beyond its valuation at the time, either as a revolutionary payment network or as a viable alternative to traditional paper capital.
Fast forward to today, Miller notes Bitcoin's rise but stresses that its journey is far from over. His current assessment puts Bitcoin's market value at about $1.5 trillion, a number he considers small compared to the global fiat capital system of about $1 quadrillion.
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“Although Bitcoin has recently hit new highs against every fiat currency, I believe that Bitcoin today remains significantly undervalued and that the world is likely in the early stages of a secular shift in how humans think about and govern capital,” Miller writes. It points out the shortcomings of current monetary systems, which are prone to human error and manipulation, often leading to devaluation through inflation and mismanagement.
In support of his argument, Miller points to the book “Broken Money” by Lynn Alden, which outlines the historical precedence of superior monetary technologies that ultimately outperform their outdated counterparts. Alden's analysis suggests that when people are presented with better options for maintaining or growing their finances, they will always gravitate toward those options.
“History shows that the best monetary technologies inevitably win out, as people replace lower-value capital technologies with superior technologies that better align with users’ goal of maintaining or increasing their given choices over time,” Miller wrote. Bitcoin, with its decentralized, transparent, and immutable ledger, offers a powerful alternative to governance-laden paper systems.
Miller also delves into the technical and philosophical underpinnings of Bitcoin, calling it “a true technological breakthrough.” Unlike traditional monetary systems, Bitcoin operates on a global scale without the need for central control, enabling transactions resistant to censorship and seizure. This ownership alone, according to Miller, radically changes the dynamics of how property rights are transferred and managed across borders and generations.
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He also comments on the general public's struggle to understand and value revolutionary technologies, citing the significant revenues generated by companies such as NVIDIA, Google, and Meta as examples of what happens when new models are adopted. “Humans are notoriously bad at contextualizing the importance and potential of new technologies,” Miller says, stressing that the case of Bitcoin is no different.
“This gap is especially wide for groundbreaking concepts that are cognitive in nature — that is, inventions that change the way we think about and relate to information and each other. Miller also explains why NVIDIA, Google, and Meta have outsized returns compared to other stocks.
In a compelling conclusion to his argument, Miller acknowledged the inherent risks and volatility associated with Bitcoin. As a class of technology and assets that is still in the development stage, it faces potential shifts in perception and regulatory landscape. However, he warns that underestimating Bitcoin's long-term potential could be as harmful as ignoring the early signs of any major technological shift.
“It's still early days,” Miller concludes, noting that Bitcoin's journey has only just begun. He remains confident that as the world continues to grapple with the limitations of fiat currencies and the possibilities offered by digital assets, Bitcoin's true value will eventually be realized, reflecting its potential to redefine the fabric of economic systems around the world. This position not only reinforces his investment strategy, but also serves as a bold prediction for the future of finance.
At press time, Bitcoin was trading at $67,406.
Featured image from CNBC chart from TradingView.com