‘Whoa’: Minerd, Bloomberg Interrupted Fed Coverage To Detail $400,000 Bitcoin Thesis

‘Whoa’: Minerd, Bloomberg Interrupted Fed Coverage To Detail $400,000 Bitcoin Thesis

On Wednesday, Guggenheim’s Scott Minerd chatted with Bloomberg Television, as he’s wont to do, usually several times per month.

As a handful of longtime readers have mentioned in various correspondence recently, I’ve stopped dedicating space to Minerd’s musings, just as I’ve eschewed coverage of Jeff Gundlach and several other “known quantities.”

The rationale behind that editorial decision is pretty simple, really. I don’t think they’ve got much to say that’s very interesting. And if you think otherwise, Minerd’s commentaries are available on Guggenheim’s public website, and last I checked, it’s free to register for Jeff’s webcasts.

More often than not, I find myself lampooning these “name brands,” and that’s not constructive, so I’ve gone the Thumper route: “If you can’t say somethin’ nice, don’t say nothin’ at all.”

However, I’m going to make an exception on Thursday because what Minerd said about Bitcoin this week was virtually impossible to ignore, coming as it does from an ostensibly serious person. For those who missed it, the clip (below) is — how should I put this? — a bit grandiose.


Minerd reminded the audience that “we made the decision to start allocating to Bitcoin” when it was around $10,000.

In a November 27 filing, Guggenheim Partners explained that “the Guggenheim Macro Opportunities Fund may seek investment exposure to Bitcoin indirectly through investing up to 10% of its net asset value in [Grayscale Bitcoin Trust].”

On Wednesday, Minerd acknowledged that Bitcoin is “a little more challenging with the current price closer to $20,000.”

So far, so good. You reserved the right to allocate a relatively small percentage of one fund to a speculative asset that subsequently doubled, and now you’re admitting that after that kind of run, the situation is “a little more challenging.” Nothing wrong with that, unless of course you think it’s a bit strange that a fund which traditionally invests “across a broad array of fixed income securities” has decided that part of its “alpha generation” strategy may henceforth involve exposing investors to the vagaries of cryptocurrencies.

Then, Minerd told Bloomberg that “our fundamental work shows that Bitcoin should be worth about $400,000.”

“Whoa,” an anchor interjects. Tom Keene was curious. “How do you frame a $400,000 Bitcoin? Is it just based on scarcity.”

“Right, Tom. It’s based on scarcity and the relative valuation to things like gold as a percentage of GDP,” Minerd explained. “So, you know, Bitcoin actually has a lot of the attributes of gold, and at the same time…”

Keene then interrupted to note (jokingly or not) that the network’s Mike McKee was a bit incredulous that Bloomberg decided to dedicate a portion of the air time around the December FOMC statement and Jerome Powell’s post-meeting press conference to Scott Minerd’s $400,000 Bitcoin thesis.

“McKee, jump in here and save this Fed special,” Tom said.

Alas, it was too late.

“You know we’re going to get emails, Tom, about Bitcoin” McKee nervously chuckled.

It is funny, that’s for sure.

What arguably isn’t funny, though, is Bloomberg entertaining this kind of rhetoric which suggests to the investing public that there’s a “fundamental” rationale for Bitcoin at nearly a half-million dollars.

In my opinion (which I suppose I’m just as entitled to as Scott is to his $400,000 opinion) there isn’t a “fundamental” case for Bitcoin at any price. Importantly, that’s not to say it’s worthless. I think it’s worthless, but that’s totally beside the point. The point in this context is that Bitcoin simply isn’t amenable to “fundamental” analysis. You can analyze it and call that analysis “fundamental” if you like, but that doesn’t make it so.

And look, if Minerd really thinks Bitcoin is “fundamentally” worth $400,000, then one obvious question is why he doesn’t move heaven and earth to figure out a way to plow a larger percentage of Guggenheim’s considerable AUM into this grossly “undervalued” asset.

After all, if you’re a global asset management and investment advisor with $233 billion in total assets and your team identifies a stock currently trading at $21 but “fundamentally” worth $400, surely you’d be willing to dedicate more than 10% of a $5.4 billion fund to it, right?



13 thoughts on “‘Whoa’: Minerd, Bloomberg Interrupted Fed Coverage To Detail $400,000 Bitcoin Thesis

  1. CNBC is currently discussing the fact that Bitcoin is approaching its minting limit. The reality is that Bitcoin is a limited edition collectors item masquerading as a currency.

  2. Actually, I’d be interested in the level of adoption a $400K BTC presuppose.

    Not impossible to calculate = 21M x 400K = 8.4 e12 (8.5 T if my exponents are right). A quick Google search says Gold has a market cap between $9 and $11 T. So, yeah, I guess 8.5T for BTC is possible.

    But I wonder if you’re really going to get that many people switching to BTC and within what timeframe. I don’t see Indian brides asking for BTCs instead of gold jewelry in the near future?

    Usually, people tend to mention 10 or 20% of Gold market cap as their hope for BTC. That seems more realistic/less ambitious?

  3. I am with H. Trading bitcoin is like trading candy crush tokens. The whole thing smacks of tulip bulbs and speculative excess. What will bitcoin be worth if real interest rates go above zero? A lot less than 20,000 is my punt.

  4. I mean ultimately… traders are going to have a harder and harder time suggesting they don’t need the kinds of returns crypto can offer and are happy to goose Tesla into 50x territory. If 8 trillion is all it takes to get a 20x return… with global printing presses going strong… I’m not going to argue what BTC IS worth but I don’t see it unlikely that it becomes that value anyway. I mean it isn’t like central banks are going to clamp down and raise interest rates inside the next decade.

  5. Bitcoin looks to me more like the beanie baby craze in the 90’s. Everyone that was caught up in Recency bias. Because the toys were not that old they only saw the value of them going up. So they bought more on the mistaken belief that the prices will continue going up. It worked for a couple of years, until it didn’t. Initially the $5 toys could go for $200-$300. At some point the market deflated and the prices went down to $2-$3 a piece, and the my co-workers lost the money they had “invested”.
    Bitcoin has already experienced this mania before, it peaked at 20,089 on 12/10/2017. It went down to 3191 on 12/08/2018. It would seem to me that history does repeat itself or least rhyme, so at some point in 2021 it should be down to 6000. One thing for sure I have worked with people who own some bitcoin, I will never understand it. Despite the theory behind it I don’t know how anyone could afford to use something that could vary from $6K to 22K in a couple of months.

  6. Bitcoin is a software token more expensive than dollars and slower than Visa or PayPal whose only comparative advantage is that is can be used to pay for illicit drugs and illegal pr0n, fueled by libertarian sentiment. This sentiment, despite the fact that anybody can make a digital coin using open sourced blockchain technology, and soon everybody – including Central Banks – will.

    Its adherents do not even believe the things that they claim to believe about it. That is why everything is priced in fiat currencies instead of bitcoin or satoshis and why the price fluctuates on the news of some governmental organization regulating it or cracking down on it. If bitcoin were as secure and private as all that, it would be irrelevant what China or some commodity commissioner does about it.

    And am I mad that I did not jump on bitcoin when I was first told about it in 2012 by a Xoogler friend of mine? That is totally irrelevant to the point.

    1. ^ If you are going to make an argument, at least scrap the logical errors and make it coherent. Guess no one should buy stocks because they all move on TrumpTweets. No one really believes in them. And I guess a Euro is more expensive than a dollar; priced in dollars.

  7. Decentralized finance is coming, like it or not. You dedicate pages of digital ink to the issues surrounding the current system, yet dismiss the one asset class capable of resolving it. All commenters on here are one in the same. No due diligence outside a quick wikipedia search for “tulips”

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