Hedge fund manager Mark Yusko forecasts that the bitcoin price has the potential to reach $1 million over the long term as the network effect leads increasing numbers of investors to use it as a store of value in place of traditional commodities such as precious metals.
Yusko, who founded Morgan Creek Capital Management and serves as the firm’s chief investment officer, is noted for his bearish outlook on the stock market. Earlier this year, he predicted that the U.S. economy is “going to have a crash and it will be massive.”
Anticipating a coming recession, he believes actively-managed funds will outperform passive index funds that track the S&P 500 or other major indices, which is one reason why he accepted Warren Buffet’s offer to conduct a decade-long wager pitting an S&P 500 index fund against a basket of hedge funds, even though the last investor who took that bet is slated to lose by a considerable margin. Buffet, 87, has since withdrawn the offer for a second wager, citing his age.
One alternative investment that Yusko believes provides hedge funds a leg up on index funds is bitcoin. In a recent tweet, he revealed that his long-term bitcoin price target is $1 million. He explains that this is a best-case scenario that will take more than a decade to reach, and he says a more conservative “base case” scenario for the bitcoin price is $500,000 -- which would represent an 8,800% increase from its current level. Based on current factors, including the assumption that privately-managed blockchains will not supplant the role of public blockchains like bitcoin, he believes there is a 75% likelihood that the bitcoin price will reach $500,000 within the next 20 years.
This forecast is one of the most attention-grabbing bitcoin price predictions made by a mainstream investment officer, as most have preferred to set short- and mid-term price targets. However, Yusko feels comfortable that the network effect -- the phenomenon whereby a commodity’s value increases as more people use it -- has already begun to set bitcoin on the path to a six-figure valuation. Specifically, he points to the increasing trend to use bitcoin as a store of value that is easier to manage than a stockpile of precious metals.
Because this bitcoin price target provides investors with such tremendous upside, he encourages them to invest 1% of their assets into bitcoin today and allow that percentage to increase as the network effect “works its magic”.
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