Government liquidity intervention drove the crypto rally, Ben Miller IV said, pointing to Japan’s yen support and the Treasury’s expanded bond buybacks.
- Investors were rotating out of an AI trade losing its “luster” amid valuation and return concerns, while crypto was “just coming back after summer break, ” said Bill Miller IV on CNBC.
- “The entire market cap of Bitcoin is less than the dollars that need to be created to cover one year of it,” Miller said.
- His father, who beat the S&P 500 for 15 straight years at Legg Mason, had said before that Bitcoin is an insurance policy against financial catastrophe and inflation.
Bill Miller IV said on Monday that crypto was “just coming back after summer break” as money rotates out of the AI trade as investors are questioning whether the returns justify the capital being spent.
In an interview with CNBC, the chief investment officer (CEO) at Miller Value Partners and son of longtime billionaire Legg Mason manager Bill Miller III, said the AI trade was “starting to lose a little bit of its luster” as concerns grew around valuations and returns that may not materialize on the sector’s capital expenditure. This prompted long-term thinkers to look at crypto, he said.
Interventions Drove The Rally
The bigger driver, Miller said, was government liquidity intervention. He cited Japan’s cooperation with the U.S. at the end of July to prop up the yen and last week’s announcement by the Treasury that it would double its purchases of long-dated fixed income.
Those moves, he said, were policymakers responding to structural imbalances that have been building for years, and he traced a line back to the global financial crisis that gave rise to Bitcoin. Investors are extrapolating, he said, asking where it ends and concluding it probably ends with more intervention.
This thinking led to the biggest short liquidation in crypto in the last five years, Miller said, adding “the fundamental case is as good as ever.”
Deficit Dwarfs Bitcoin
“The entire market cap of Bitcoin is less than the dollars that have to be invented from just this year’s behavior alone,” Miller said, with the US budget deficit at $1.8 trillion this year. That, he said, was structural demand with a long runway ahead. The structural problem, he said, is that “fiat governments as a whole are not all that accountable” over the long run. And, he added, investors keep arriving at that conclusion, zooming out.
Bitcoin’s price was down by 0.3% during the past 24 hours, trading just above $79,000. On Stocktwits, the retail sentiment around BTC remained in the ‘extremely bullish’ zone, accompanied by chatter at ‘extremely high’ levels over the past day.
A Family Thesis
Bill Miller III, who has been well known for his investment in Bitcoin for more than a decade, had said “It’s an insurance policy against financial catastrophe, against inflation,” in a 2024 interview. He revealed back then that he first bought Bitcoin at about $200 and that his average cost from 2012 to 2024 was around $700.
He is known for beating the S&P 500 (SPX) for 15 straight years, managing the Legg Mason Value Trust from 1991 through 2005. His son took over majority control of Miller Value Partners in 2023.
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