Digital Assets: Demand For Bitcoin Growing Faster Than Its Supply (Bill Miller)
Veteran investor Bill Miller says cryptocurrency has been the “single best performing asset class” in the last year, five-year, and 10-year periods.
That’s already quite a track record. But according to Bill Miller, the legendary investor who founded Miller Value Partners, the cryptocurrency is now out of the woods, despite its volatility.
He said bitcoin’s staying power was getting “better every day.”
It’s supply and demand
“The bitcoin story is very easy, it’s supply and demand,” Miller said to CNBC. “Bitcoin’s supply is growing at around 2.5% a year, and the demand is growing faster than that and there’s going to be a fixed number of them.” (MARKETS INSIDER)
Apart from the basic economic truth of demand and supply, there has been a convergence of bullish factors in recent months. That has triggered the highly bullish trend in bitcoin.
Corporates dive into crypto
To start with, large, listed incorporates such as MicroStrategy (NASDAQ: MSTR) and Square (NYSE: SQ) have pumped in hundreds of millions of dollars of their financial reserves into bitcoin for a variety of reasons.
These include expectations of high inflation that would erode the purchasing power of fiat currency. They also fear a decline in the value of the US dollar, and the phenomenon of zero or negative interest rates spreading across the world.
In contrast to central-bank printed fiat currency, the supply of bitcoin is mathematically limited to a finite amount.
Which is why Miller says, “there’s going to be a fixed number of them” of bitcoin.
Payment fintechs welcome crypto
PayPal (NASDAQ: PYPL) announced last month that it would soon open its platform to cryptocurrency purchases and sales.
The announcement was a major push in favor of crypto adoption. Unsurprisingly, bitcoin moved up 8% on that day itself.
According to Barchart.com, bitcoin’s returns to date are:
5-day – 13.21%
YTD – 115.10%
Earlier this year, challenger bank Revolut started crypto transactions on its mobile app in the US. In July the company launched crypto buying and selling in 49 US states through Paxos.
Miller commented: “I think every major bank, every major investment bank, every major high net worth firm is going to eventually have some exposure to bitcoin or what’s like it, which is gold or some kinds of commodities.”
Meanwhile, Coin Desk highlighted a November 6 report by JPMorgan (NYSE: JPM). The report said that the massive inflows into the Grayscale Bitcoin Trust indicated that institutional investors were getting active in cryptos.
JPMorgan said in this respect that family offices that were previously invested in gold ETF’s, may now be considering bitcoin as an alternative to the yellow metal.
Related Story: Paypal Sends Bitcoin Into Orbit
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