According to Bill Miller, fund manager and founder of Miller Value Partners, holding Bitcoin is better than holding cash because the digital asset is immune to poor Federal Reserve policies. In the market letter for the fourth quarter of 2020, Miller explains that some companies are already switching to Bitcoin in order to avoid the “guaranteed losses” of holding cash.
Bitcoin beats Berkshire Hathaway
In his brief focus on the top crypto, the fund manager first notes how Bitcoin has “outperformed all major asset classes” after the digital asset “has risen by more than 50% since mid-December”. Miller then reminds his audience that the market cap of the digital asset is now outperforming JP Morgan by Jamie Dimon or Berkshire Hathaway by Warren Buffet.
At the time of writing, data shows that market caps for JP Morgan and Berkshire Hathaway were $ 400 billion and $ 540 billion, respectively. On the flip side, Bitcoin, which has hit a new all-time high for the third year in a row, now has a market cap of $ 716 billion.
Bitcoin’s rise in market capitalization means the digital asset that Warren Buffet previously compared to rat poison is now more valuable than Berkshire Hathaway. It is this obviously new fact that Miller is using to attack Buffet’s infamous Bitcoin comment. In his counter-argument, the fund manager says:
Warren Buffett famously called Bitcoin rat poison. He might be right. Bitcoin could be rat poison and the rat could be cash.
Growing demand for BTC
Meanwhile, in support of his claims about BTC, the fund manager points to the growing demand for Bitcoin from big companies like Square Inc, Massmutual and Microstrategy. According to Miller, these companies have “converted cash into bitcoin instead of guaranteeing losses from cash on their balance sheets”. In addition to these companies, smaller investors have also joined the BTC acquisition craze. These investors buy the digital asset through fintech firms like Square Inc and Paypal. According to Miller:
It is estimated that Paypal and Square are buying all 900 new bitcoins that are mined every day on behalf of their customers alone.
Miller ends his letter by suggesting that if more “companies decide to diversify a small portion of their cash balance into Bitcoin instead of cash, the current relative trickle in Bitcoin would become a stream”.
Do you agree with Miller’s claim that holding Bitcoin is better than holding cash? Let us know what you think in the comments section below.
Photo credit: Shutterstock, Pixabay, Wiki Commons
