Jan 27, 2021
Minerd says institutional demand can’t justify Bitcoin’s price
Steve Eisman says he's staying out of bitcoin
Guggenheim’s Scott Minerd says institutional investors alone aren’t enough to sustain Bitcoin prices above US$30,000.
“Right now, the reality of the institutional demand that would support a US$35,000 price or even a US$30,000 price is just not there,” Minerd, the firm’s chief investment officer, said in an interview on Bloomberg Television. “I don’t think the investor base is big enough and deep enough right now to support this kind of valuation.”
Bitcoin is still a viable asset class in the long run, he said. Minerd, who helps oversee more than US$310 billion of assets, made waves last month when he said the digital asset could eventually be worth US$400,000. Minerd said Jan. 20 on CNBC that Bitcoin may have temporarily peaked and could retrace to US$20,000.
Institutional adoption has been one of the driving forces behind Bitcoin’s rally to record highs, with the coin reaching almost US$42,000 earlier this month before pulling back to near US$31,000. BlackRock Inc. dipped its toe into the crypto universe for the first time this month, saying cash-settled Bitcoin futures are among assets that two funds were permitted to buy. Corporate treasurers have plowed cash into the token and universities such as Harvard and Yale have reportedly begun buying cryptocurrency as well.
Cryptocurrencies are not the only speculative area of the market that Minerd has his eye on, saying that the frothiness surrounding heavily shorted companies like GameStop Corp. will continue through the end of the first quarter.
“It’s not uncommon to see squeezes like this,” he said. “Now that we have all these small investors in the market and they see this kind of momentum trade, they see the opportunity to make money and this is exactly the sort of frothiness that you would expect as you start to approach a market pop.”“While there’s frothiness, while valuations are getting extended, these are poor timing tools,” he added. “So, this could go on for a quite awhile.”