Last week, Scott Minerd, Global Chief Investment Officer of Guggenheim Partners and the Chairman of Guggenheim Investments, the man who said last December that “Bitcoin should be worth about $400,000”, shared his latest thoughts on Bitcoin.
Guggenheim Investments is “the global asset management and investment advisory division of Guggenheim Partners and has more than $233 billion in total assets across fixed income, equity and alternative strategies.” It focuses on “the return and risk needs of insurance companies, corporate and public pension funds, sovereign wealth funds, endowments and foundations, wealth managers and high net worth investors.”
On 16 December 2020, after the Bitcoin price had finally broken through the $20,000 level on all crypto exchanges to set a new all-time high, Minerd, the Guggenheim CIO, talked about Bitcoin during an interview on Bloomberg TV.
The interview started by the Guggenheim CIO being asked by Scartlet Fu, Bloomberg TV’s Senior Editor of the Markets Desk, about the Guggenheim Macro Opportunities Fund and the decision by its managers to invest “up to 10% of its net asset value in Grayscale Bitcoin Trust.” In particular, he was asked if Guggenheim had started buying Bitcoin yet and how much this decision was “tied to the Fed’s extraordinary policy.”
“To answer the second question, Scarlett, clearly Bitcoin and our interest in Bitcoin is tied to Fed policy and the rampant money printing that’s going on. In terms of our mutual fund, you know, we are not yet effective with the SEC. So, you know, we’re still waiting.
“Of course, we made the decision to start allocating toward Bitcoin when Bitcoin was at $10,000. It’s a little more challenging with the current price closer to $20,000. Amazing, you know, over a very short period of time, how big run-up we’ve had, but having said that, our fundamental work shows that Bitcoin should be worth about $400,000. So even if we had the ability to do so today, we’re going to monitor the market and see how trading goes, what evaluation that ultimately we have to buy it.”
He then explained how his firm came up with the $400K valuation for Bitcoin:
“It’s based on the scarcity and relative valuation, such as things like gold as a percentage of GDP. So, you know, Bitcoin actually has a lot of the attributes of gold and at the same time has an unusual value in terms of transactions.“
Then, on February 2, when Bitcoin was trading around $40K, Minerd said during an interview with CNN’s Julia Chatterley that although Guggenheim’s research suggested that although the Bitcoin price could eventually get as high as $600K, the pace of Bitcoin’s rally (which had resulted in a doubling of the Bitcoin price in less than two months) suggested “short-term speculation”, that the rally was not sustainable due to lack of sufficient interest from institutional investors, and that he could see this speculative bubble bustring and causing a 50% crash (which would take the Bitcoin price back to around $20K).
Well, on July 9, when Bitcoin was trading around $33K, during an interview on CNBC’s Worldwide Exchange, the Guggenheim CIO was again talking about Bitcoin, but this time he was more short-term bearish on Bitcoin than he has been at any point in 2021.
Minerd thinks we are current witnessing a crash in the Bitcoin market and that the Bitcoin price could drop by as much as 80% from this year’s all-time high (which was nearly $65K):
“When I did my work on crypto, Bitcoin and other cryptocurrencies plainly had gone parabolic just gone parabolic, and parabolic markets are impossible to sustain. So, a normal correction, or sell-off, would be 40-50%.
“But when we look at the history of crypto and we look at where we are, I mean, I really do believe this is probably a crash and, you know, a crash would be maybe down 70%-80%, which let’s just say that’s between $10,000 and $15,000…
“Brian… the market is trading heavy. It’s very hard to get this thing to reverse, and… I wouldn’t be in a hurry to buy Bitcoin and I don’t see any reason to pwn it right now… If you’re gonna be a speculator, speculate that it’s heading lower.“
The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.
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