Bill Miller: 'There is no other asset that combines Bitcoin's liquidity with its upside potential'

Investor Bill Miller offered a spirited defense of Bitcoin in a new investor letter published Thursday that focused in part on MicroStrategy, the publicly-traded software firm that has amassed significant holdings of the cryptocurrency.

The Q4 letter noted that Miller Value Partners bought into MicroStrategy's 0.75% convertible bond and explored the reasoning behind the move. That thread evolved into a wider exploration on the topic of bitcoin, during which Miller wrote:

"Now that we know what Bitcoin is, why might someone want to own some? The short answer is that there is no other asset that combines Bitcoin’s liquidity with its upside potential. Bitcoin is still an emerging and under-owned technology in an enormous addressable market, and it has a brilliant, logically consistent protocol with distributed governance."

In the letter, Miller sought to rebut some of the criticisms against Bitcoin, including the contention that regulators will ban it. On this, he argued:

"It has worked for twelve years with little regulatory interference under multiple administrations. In fact, the regulatory outlook for Bitcoin in the US has never been brighter, which may explain why so many institutions are now getting involved."

As to the criticism that Bitcoin is "too volatile to be a store of value or medium of exchange," Miller contended:

"Indeed, as we flagged earlier, it has done much better than simply “store” value. When Bitcoin’s volatility approaches that of Treasuries, its market cap and price per bitcoin will be immensely higher and leave little room for excess return. At that point, one could imagine Bitcoin transitioning to become a more commonly used medium of exchange."

Miller's full letter can be found here.