With Bitcoin (BTC 0.65%) down 50% from its all-time highs, the decision to invest in cryptocurrency has become tremendously polarizing. Some investors have already thrown in the towel, convinced that higher returns are able to be found in sectors such as AI.
But not value investors such as Bill Miller IV, chairman and chief investment officer of Miller Value Partners. As he pointed out in a recent CNBC interview, “the fundamental case for Bitcoin has never been stronger.” For crypto investors willing and able to wait out the current period of volatility, is this an invitation to buy Bitcoin?
Does Bitcoin have any intrinsic value?
The problem, quite frankly, is that it’s getting harder and harder to make the case that Bitcoin has any intrinsic value. If it’s a “store of value,” then why is its price collapsing? If it’s a “means of exchange,” then why is almost nobody using Bitcoin to make everyday purchases? If it’s a long-term investment asset, then why does it produce no cash flows? The value of Bitcoin seems to be based on nothing more than investor sentiment, meaning that its value could theoretically fall all the way to zero.
Image source: Getty Images.
However, as Miller points out, there is one objective reason why Bitcoin has tremendous value. As a non-inflationary digital currency, Bitcoin is arguably a sounder form of money than fiat currencies, which tend to lose their purchasing power over time. Add in the fact that the U.S. government continues to grow its $36 trillion debt load at a prodigious rate, and it’s obvious why many investors are losing faith in the U.S. dollar.
That was, quite frankly, the reason Bitcoin and gold became focal points of Wall Street’s “debasement trade” last year. Spooked by the prospect of higher tariffs and rampant inflation, investors started moving their money out of fiat currencies and into Bitcoin, gold, and precious metals. So, as Miller suggests, various forms of this “debasement trade” should continue to propel Bitcoin higher for the foreseeable future.
So how much higher can Bitcoin go?
In the CNBC interview, Miller did not offer a precise price target for Bitcoin. Instead, he merely suggested that Bitcoin’s fundamentals should continue to power it higher.
Today’s Change
(-0.65%) $-416.89
Current Price
$63,752.00
Key Data Points
Market Cap
Day’s Range
$63653.00 – $64199.00
52wk Range
$57945.16 – $126079.89
Volume
19.5B
But it’s possible to look at online prediction markets for clues about Bitcoin’s future price trajectory. On the Kalshi prediction platform, for example, traders currently give Bitcoin a 14% chance of hitting $100,000 this year.
In other words, Bitcoin has a 1-in-7 chance of increasing 50% in value this year, based on its current price of $64,000. In addition, Bitcoin has an 8% chance of hitting $110,000 and an 8% chance of hitting $120,000.
Time and time again, Bitcoin has bounced back from adversity. I’m expecting this time around to be no different. As a result, I’m siding with the value investors.
After all, Miller Value Partners is the firm founded by legendary value investor Bill Miller, who beat the S&P 500 for 15 consecutive years. That’s a tremendous track record of finding value in the market. That leads me to think that Bitcoin at $63,000 is a real value.