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Several high-profile Wall Street personalities have drawn attention lately for investing in Bitcoin – most notably billionaire hedge fund manager Paul Tudor Jones.
But one investing legend was buying Bitcoin years before it became fashionable: Veteran fund manager Bill Miller.
Miller built his reputation as co-manager of Legg Mason's Capital Management Value Trust fund in the 1990s and the early 2000s. His best-known achievement was beating the S&P 500 for 15 years straight, from 1991 to 2005.
When Miller first bought Bitcoin way back in 2014, it caught many by surprise. While his definition of "value" was broader than most – he was buying tech stocks like America Online and Dell Computer in the early 1990s – cryptocurrency was literally in a class by itself.
Many investing experts in 2014 were deriding Bitcoin as a "Ponzi scheme" devoid of any real value. Warren Buffett called it a "mirage." Predictions Bitcoin would go to zero were common.
But Miller thought otherwise.
His Reasons for Buying Bitcoin in 2014 Still Stand Today
Miller's attention was drawn to Bitcoin around the time of the early 2014 crash resulting from the implosion of the Mt. Gox exchange – at the time the biggest Bitcoin exchange in the world.
That's when he started buying.
"When that [the Mt. Gox collapse] didn't destroy, in essence, the underlying psychology of it, it looked to me like it probably had a decent base of around $500 per coin," Miller told CNBC in April of that year.
He publicly disagreed with Warren Buffett, who had earlier called Bitcoin a "mirage."
Instead, Miller saw Bitcoin as a new way of transferring money that, like gold, drew part of its value from scarcity.
"If there were 21 million checks in the world and that's all there were, checks would be very, very valuable," he said on the CNBC program "Squawk Box."
And then he did a little back-of-the-napkin math.
"If it becomes only 10% as popular as gold, then it's an $800 billion market value. You can lose 100 percent of your money, or you can make 120 times your money. I think the risk/reward is OK."
Bitcoin's bull run in late 2017 distorted his holdings. When BTC hit its all-time high, Miller said that half of the money in one of his hedge funds was tied up in Bitcoin.
But just as in 2014, the following crash did not deter him.
"What I observed with Bitcoin is that it's following a very time-honored path of disruptive innovation going all the way back to the printing press, railroad, electricity, radio in the 1920s, biotech, the Internet," he told FOX Business at the end of February 2018, with BTC having plunged 50% in less than 10 weeks.
"Bubbles are necessary to bring capital into the market to see if these innovations are actually going to stand," he said.
The following "crypto winter" dropped Bitcoin as much as 84% from its all-time high of just under $20,000. A slow recovery since has pushed the Bitcoin price past $11,000.
And today Miller still owns Bitcoin.
Bill Miller's Thoughts on Investing in Bitcoin Today
Miller has given several interviews recently in which he gives his current views on Bitcoin.
In a FutureProof interview earlier this summer, he recalls that he started buying Bitcoin again in 2014 after the price crashed to $200. He estimates his average cost is about $300 per BTC.
Miller's outlook on Bitcoin hasn't changed all that much:
"It had many different ways to win. My view was if any of those various things – it became a currency, it became a payment system, it became a non-correlated asset – any of those things, much less all of them, would lead to a very dramatic move in the underlying price. That was also helped along by the fact that it is limited to 21 million Bitcoin and it is decentralized."
And he remains optimistic that Bitcoin could deliver a massive return, even at current prices.
"I could make 100x of my money. I could make 1,000x, maybe more than that. I can only lose 100%… I still have it. I haven't sold any Bitcoin," Miller said.
He also has a counterintuitive view on the risk Bitcoin poses to those thinking of buying Bitcoin now at today's much higher prices.
"Unlike many investments, with Bitcoin the higher it goes, the less risky it is longer term," Miller said in a July 10 Bloomberg "Masters in Business" podcast interview with Barry Ritholtz. "With other investments, with stock, the higher it goes – unless it's being driven totally by fundamentals – the riskier it gets…. Whereas here, what's leading to Bitcoin's price [increase] is greater and greater adoption."
The Next Phase of the Bitcoin Phenomenon
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That's exactly what turned these young, broke students – even a 13-year-old kid – into millionaires.
And thanks to a rare set of circumstances, you have a chance to do the same. Learn more…
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.