With the launch of bitcoin futures by two leading American options exchanges, lending the cryptocurrency more credibility among mainstream investors, Wall Street is turning to known figures to explain the phenomena. One proven financial wizard they might listen to is legendary value investor Bill Miller whose hedge fund is now holding 50% of its assets in bitcoin.
Bitcoin-Heavy Hedge Fund
Bill Miller, chairman of Miller Value Partners LLC, has revealed in a recent interview that bitcoin holdings comprise approximately 50% of the assets in his MVP 1 hedge fund. He is a former chairman of Legg Mason Value Trust mutual fund and bought his place in the history books by beating the S&P 500 Index consecutively for fifteen years. Miller explained that he started by holding a much smaller amount in bitcoin but the investment quickly mushroomed along with bitcoin’s value and came to dominate half his portfolio.
Describing how a value investor like himself can benefit from riskier assets, Miller pointed to the negative reactions people had toward Amazon and Google when they first entered the market. He thinks that bitcoin’s vocal detractors on Wall Street like JP Morgan’s Jamie Dimon exhibit “old thinking” when it comes to a revolutionary new concept. This is similar to a sentiment expressed by fellow hedge fund mogul Mike Novogratz who recently said bitcoin skeptics are just too old to get it.
Bitcoin Cash Yes, Altcoins No
Asked about investing in any other of the many available cryptocurrencies, Miller answered he doesn’t hold any other than bitcoin cash (BCH) which he described for his interviewer as a kind of dividend (as he got it after the fork by holding bitcoin). Explaining why he doesn’t invest in altcoins, Miller referenced bitcoin’s market dominance and said this gives it the most likely chance to survive long term after all the imitators disappear. He also doesn’t believe in ICOs as the issuers are not liable to provide any return and can just use the money to buy a boat instead of doing any work on the supposed project.
Time will tell if this is the best strategy to invest in the cryptocurrency world as other hedge funds have chosen a different approach than Miller’s. Arrington XRP Capital for example, the TechCrunch founder’s new $100 million hedge fund, will invest in a wide variety of cryptocurrency assets and ICOs. Overall, there are now well-over 100 hedge funds testing different strategies for investing in cryptocurrency.
Would you invest half of your available wealth in bitcoin or is that way too risky? Share your thoughts in the comments section below!
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Author: Avi Mizrahi