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Value investor Bill Miller said Friday he believes owning bitcoin becomes a safer investment decision the higher the price of the digital coin gets.

Bitcoin was trading over $40,000 per coin Friday afternoon, having posted a record high of almost $42,000 earlier in the day. The cryptocurrency has been on a tear since March, which coincides with governments around the world undertaking massive stimulus efforts to offset the impacts of the coronavirus pandemic.

"It gets less risky the higher it goes" because it is still early in the adoption cycle, Miller said on "The Exchange." "That's the opposite of what happens with most stocks."

"Bitcoin's total supply is growing less than 2% a year and it's obvious by the price that the demand is growing much, much faster than that. As long as that obtains, bitcoin is likely to go higher and perhaps considerably higher," added Miller, founder and chief investment officer of Miller Value Partners.

Miller, who managed a fund that beat theS&P 500for 15 straight years while at Legg Mason, said he did not have a specific price target for bitcoin but rather he has "price expectations."

"I think that bitcoin ... should probably be up 50% to 100% from here in the next 12 to 18 months. And if you were to ask me the over or under, I would definitely say it would be much more likely to be higher than lower," he said.

Bitcoin has had dramatic corrections in the past, and Miller cautioned investors that the cryptocurrency's volatility is unlikely to go away any time soon, even as more institutional investors get behind it. "I think if you can't take that, you probably should not own bitcoin," he said.

"Bitcoin tends to move in spurts, which tend to be followed by corrections," Miller added. "I think there have been three corrections of 80%, which is normal in this type of very, very early technology with a very, very big total addressable market."

The price of bitcoin has experienced a robust ascent, particularly during the fall and into the new year. Since Sept. 1, the digital coin's value has risen about 230%.

Increased adoption from institutional investors has been credited with helping fuel the rise, with the likes of Paul Tudor Jones and Stanley Druckenmillerpitching bitcoin as a strong hedge against inflation. BlackRock's Rick Rieder in November touted it as a potential alternative to gold.

Miller, for his part, has owned the cryptocurrency for years.

In January 2018, Miller told CNBC he started to buy bitcoin around 2014 or 2015 at an average cost of $350 per coin. At that time, he said he had moved his bitcoin holdings into a separate fund. On Friday, Miller said that was still the case, but explained he is hoping to bring about rule changes to make it easier to own in his primary funds.

"We own bitcoin in a partnership that my partner, Samantha McLemore, started recently called Patient Capital, and it's about a 5% position in there," he said. "We don't own it in the fund because it's very, very difficult to do that. We're looking right now at the regulatory aspects of that and considering having the SEC give us the go-ahead to do that in our funds."

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Bill Miller says bitcoin becomes less risky the higher the price goes - CNBC

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Proponents of digital currencies are exuberant about the potential for 2021 after a monster year that saw highflying Bitcoin prices grab control of the spotlight.

That's nothing new but the much wider feeling across Wall Street that "this time it's different" is.

Bitcoin prices recovered from a multiyear slump in 2020. It breached its 2017 record near $20,000 in November, and it has goneparabolic ever since, sitting well above $40,000 as of this publication.

What might actually make this time different, however, isn't that Bitcoin prices hit new highs in 2020 and finished the year with a head of steam. It's that the cryptocurrency succeeded in its first trial by fire.

The resilience of that digital coin and others and the reasons behind it have many excited not just about the prospects for this young asset class in 2021, but also for the overall adoption of this burgeoning financial technology.

First, a quick refresher for the uninitiated:

Bitcoin is one of many digital currencies. Unlike traditional "fiat" currencies created and operated by a government and central bank, Bitcoin is "mined," or created by people who solve mathematical problems with computing power. Transactions are kept on the blockchain, an encrypted and decentralized ledger that protects the integrity of Bitcoin while also ensuring the privacy of the user.

And in contrast to fiat currencies, whichcan be printed on demand, Bitcoin is limited to a total of 21 million possible coins once it is fully mined.(Fortunately, it can be divided fractionally down to 1/100,000,000th of a Bitcoin, known as a "Satoshi.")It was designed to be a true store of value that couldn't be manipulated.

Indeed, Bitcoin was invented in 2008 and launched in 2009, justas world governments were printing money to respond to the global financial crisis. A slew of other digital assets followed.

"One of the things that fascinates me with how Bitcoin has come into existence is that it came in upside-down," says Greg King, CEO of Osprey Funds, which operates the Osprey Bitcoin Trust. "It came in through individual acceptance, a grassroots type of thing."

Bitcoin prices crashedafter sharp rallies in 2013 and 2017, but these declines weren't precipitated by any major event spanning multiple asset classes. The digital coin was merely cut by the other edge of speculation's blade; worries about hacking risks, for instance, hampered cryptocurrencies in 2018.

So the bear market of 2020, brief as it was, marked the first time Bitcoin and other digital currencies faced a truly global crisis that threatened numerous types of investments.

Cryptocurrencies were hardly immune from the bear turn. Investors first started selling off equities in February as they moved to cash, and even safety plays such as gold eventually took a dip in March. But Bitcoin eventually fell, too, crashing hard in mid-March.

Those lows were short-lived, however. Digital currencies bounced hardest off the bottom, and Bitcoin turned positive by April.

It then took flight through the end of 2020.

"What we needed to see was Bitcoin survive a global macro meltdown," says Tyrone Ross, CEO of Onramp Invest, a digital platform allowing financial advisors to provide clients with access to cryptocurrencies. "If you look at when it was invented until March, it had never experienced a recessionary environment."

"It correlated with the market and came down with everything else. There was a flight to dollars. (But) if you look at how it behaved since then, folks see that there's something here. The actual activity on the blockchain was impressive."

A push to liquidity, such as the one seen in March, is rare, and it usually occurs at the climax of a market selloff. The fact that it also happened in Bitcoin around the same time hints that more institutional interest was in play than in previous crashes.

And growing institutional interest is one of several trends that King expects to be a major driver in Bitcoin prices over the years to come.

Coinbase, a digital currency exchange that's expected to go public this year, said on Nov. 21 that its institutional asset base from $6 billion in April 2020 to $20 billion as of mid-November. And Canaccord Genuity recently pointed out a laundry list of recent institutional and other noteworthy cryptocurrency events. Here are just a few highlights from the last quarter of 2020:

That's just a sliver of the announcements from Q4, which also included moves from a number of nations advancing digital currency or blockchain initiatives, including the U.S., Canada, Japan, England, South Korea, China and Russia.

King adds that individual interest is being driven higher as platforms such as Square (SQ) and PayPal (PYPL) are making digital currencies such as Bitcoin more accessible to people. And in October, Coinbase launched a cryptocurrency debit card under the Visa (V) banner.

Then there's inflation.

Cryptocurrencies such as Bitcoin are drawing comparisons to gold, as they're a relatively fixed asset at a time when fiat money printing is growing out of control.

Billionaire Paul Tudor Jones, a relative newcomer to the space, told CNBC that the cryptocurrency market is "still in the first inning" and that he sees Bitcoin as a better inflation play than Treasury Inflation-Protected Securities (TIPS) and gold.

BCA Research strategists see a similar advantage, saying that "in addition to benefitting from ample global liquidity and the cyclical US dollar bear market, Bitcoin will be an attractive hedge against rising inflation in the second half of the decade."

Time will tell whether that's the case. Inflation fears after the financial crisis led to a spike in gold prices in 2011, but when higher rates of inflation failed to materialize, investors exited the gold trade quickly. Nevertheless, the metal, like its digital counterpart, did make new highs in 2020 around $2,070 per ounce; unlike Bitcoin prices, gold has pulled back considerably, now sitting around $1,850.

King says there's another interesting twist to the cryptocurrency narrative this time around.

"One thing I've found interesting versus 2016 and 2017 is nobody's asking about Bitcoin and nefarious activities," he says. "I haven't gotten a single question on that. Obviously, all types of currencies are used for illegal activities. That question seems to have disappeared. To me, that's an indicator of growing acceptance and understanding."

It's possible cryptocurrency is following the playbook laid out in 1914 by union leader Nicholas Klein: "First they ignore you. Then they ridicule you. And then they attack you and want to burn you. And then they build monuments to you."

Bitcoin is attracting a growing number of analysts, and as a result, Bitcoin price targets are becoming more commonplace.

Some have been downright bombastic. Former Adaptive Capital partner Willy Woo calls $200,000 a "conservative" estimate for year-end 2021. In mid-November, Citigroup told its institutional clients that it sees the potential for Bitcoin prices to rise as high as $318,000 by the end of this year.

Others are more restrained. For instance, BTIG's Julian Emanuel says Bitcoin could reach $50,000 the same price target Bloomberg pointed to in its Crypto Outlook 2021.

Ross, without making a specific prediction, sees the cryptocurrency space further growing in value to the global financial system:

"I think in 2021 we'll see a lot of news that will move the price higher," he says. "We'll get closer to an ETF, announcements from broker-dealers that they're getting involved. Some more FOMO (fear of missing out) from retail investors, and what you'll also see is that at some point you'll see a massive RIA announce that they have a meaningful amount of their business in BTC."

"One of the things we do believe is that there's a secular trend into Bitcoin," adds King, who's also reticent to throw out a price target. "We're in an S-curve type of growth with an emerging technology. If you look at the previous patterns of prices versus adoption, it tends to consolidate and then have a multiple move higher. This is starting to look pretty decisively higher."

This combination of increased investment interest in Bitcoin as an investment, as well as increased adaptation of Bitcoin, cryptocurrency and blockchain technologies by companies, points to a perfect storm for prices.

But Ross adds a word of caution.

"You always have risk," he says. "Systemic risk, market risk There are some global macro events that can affect markets, and as Bitcoin becomes more financialized, it won't become that noncorrelated asset anymore."

One of the biggest risks to any bullish calls, sky-high or not, is the potential for regulatory agencies to suddenly erect a brick wall.

While fewer people might be asking about using Bitcoin to buy illicit substances anymore, regulatorsare again taking a close look at digital currencies, this time with a focus on how these coinsact as securities.

The most noteworthy of late: In late December, the Securities and Exchange Commission SEC filed a lawsuit against the "altcoin" Ripple. (Altcoins are any digital coin that's an alternative to Bitcoin.)The issue at question is whether its digital currency is really a digital currency, or if it's an unregistered securities offering.The news was enough to cut Ripple pricesby more than half in just a few days, and several cryptocurrency exchanges stopped trading in the altcoin until the issue is resolved.

Even then, some Bitcoin bulls see a silver lining.Ripple has a different mechanism relative to Bitcoin's decentralized model, so somebelieve a crackdown on altcoins points to Bitcoin as the first (and maybe only) stop for people interested in cryptocurrencies.

While Bitcoin prices might be sitting above $40,000 right now, you can still enter it (and most other cryptocurrencies) for literally just a few bucks by purchasingfractions of coins. But no investor should spend a cent without brushing up on what is still a very nascent technology and asset class.

"The best investment that any investment that any individual can make is learning as much as they can," Ross says. "That truly is the best way."

To that end, sites such as Coinbase and Binance Academy offer rudimentary basics to get people up to speed.

If you feel like you're ready to begin investing directly in the cryptocurrencies themselves, you can do so on a number of sites, including Coinbase and Robinhood, and even PayPal and Square's Cash App.

Just consider startingsmall.

Most analyst outfits at this point have at least acknowledged the upside possibilities for Bitcoin and other digital currencies. However, theydon't all view cryptocurrenciesas investment-worthy for most retail investors just given the still-speculative nature of the space and uncertain regulatory outlook.

Not to mention, for all their highs, digital currencies have shaken a lot of people out at their lows.

"If you feel left out of the gains, don't," the Wells Fargo Investment Institute wrote in December. "Bitcoin has indeed outperformed gold and the S&P 500 Index over the last three years, but look at the volatile journey Bitcoin investors had to endure to get there. Up until only two months ago, three-year total returns were pretty much the same among the three assets, but volatility differed.

"Cryptocurrency investing today is a bit like living in the early days of the 1850s gold rush, which involved more speculating than investing," adds the WFII, which still admits "fads don't typically last 12 years."

Those who only invest through 401(k)s, IRAs and other accounts through traditional brokerages can't directly invest in digital currencies through those vehicles yet. But you still have a few options, such as investing incompanies that have tied their futures to cryptocurrencies and/or blockchain technology.

"For most traditional investors, look at companies that are on the fringe of this technology, like Square," Ross says.

The SEC has not yet approved anexchange-traded fund (ETF) that tracks Bitcoin prices by actually holding thecryptocurrency in the same way that, say, the SPDR Gold Shares (GLD) holds gold. (However,many hope 2021 is the year we finally see a Bitcoin ETF.)

However, investors do have access to a few ETF-esque funds. For instance, the Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE), which trade "over the counter," track the price of their respective cryptocurrencies. But theyare different than ETFs in a few noteworthy ways, whichwe outline here, that investors should know about before purchasing.

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The 2021 Outlook for Bitcoin Prices, Adoption and Risks - Kiplinger's Personal Finance

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Leigh Cuen is a reporter in New York City. Her work has been published by Vice, Business Insider, Newsweek, Teen Vogue, Al Jazeera English, The Jerusalem Post, and many others. Follow her on Instagram at @leighcuen.

Bitcoin fans across the country are rallying against a common enemy, the Treasurys Financial Crimes Enforcement Network (FinCEN).

US Treasury Secretary Steven Mnuchin, one of President Donald Trumps closest associates, has been working overtime since Thanksgiving to push several crypto regulations through before the Biden administration takes over on January 20, 2021.

FinCEN statements list the usual reasons for financial regulations, an effort to curtail terror financing, sanctions evasion and black market activity related to drugs and weapons, without any mention of new evidence justifying the unusual urgency.

These include a FinCEN proposal that would require exchanges to store records involving transactions over $3,000 sent to any personal wallets, plus report users to FinCEN for cumulative transactions worth more than $10,000 in a single day. For comparison, banks are required to flag cash withdrawals over $10,000, not transactions within the banking system itself, and banks are not required to keep tabs on where the customer spends the cash taken out of the system.

Plus, a complementary FinCEN statement proposed requiring Americans to report crypto holdings worth more than $10,000 at any foreign service provider. Although the details of this second initiative are still vague, its clear the Treasury wants to make special note of the know-your-customer information for anyone dealing with thousands of dollars worth of bitcoin.

The Electronic Frontier Foundation called this a push for more financial surveillance without any need for warrants or suspicion. (Bitcoin users already need to report their holdings in their taxes, just like any other asset.) As such, over 65,615 crypto advocates submitted critical statements to FinCEN, including companies like Fidelity and Square. Squares statement said the company would be required to collect unreliable data about people [recipients] who have not opted into our service or signed up as our customers.

The Washington D.C. nonprofit Coin Center issued a statement saying this proposal would also limit American access to decentralized services, where users may not know their counterparty or network operators. Peter Van Valkenburgh, Coin Centers research director, told TechCrunch the proposal is highly unusual because it only allowed for 15 days of comments, instead of the standard 60-day period, for a rule that would impose more data collection requirements on crypto companies than other financial institutions.

It requires the exchange to collect, retain and report extra information that they dont have to for a cash transaction, like the name and physical address of a counterparty, he said. Its on a timeline to complete this process, as far as we know right now, before the new administration. That means the rule would be final. The new administration could issue a new rule, and overturn that past rule, but thats a much more difficult process.

Incoming Senator Cynthia Lummis, sworn in the first week of January, tweeted it was ridiculous for the Treasury to have this unusually short comment period. Likewise, nine members of Congress issued a letter warning this hasty rulemaking over the winter holidays undermined the legitimacy of the process.

These proposals arent just sudden, theyre also so vague that they appear poorly researched. Both Square Crypto developer Matt Corallo and MIT Media Lab director Neha Narula issued public statements saying the FinCEN proposals confused basic technical concepts about how bitcoin addresses work. This would make such regulations difficult to implement, burdening American companies with prohibitively high compliance precautions.

Political motivations are always hard to discern, but public rumors have consistently indicated this is a personal push by Mnuchin, not further up or down, Corallo said. Well learn a lot about what the next few years look like based on what [incoming Secretary Janet] Yellen says and what new leadership at FinCEN looks like. There are a lot of things Yellen could decide, but it would be hard for her to do a worse job of building useful and practical regulations than Mnuchins last-minute attempts here.

Van Valkenburgh said his nonprofit, and other crypto industry organizations like it, are prepared to challenge the ruling in court if the Trump administration fails to follow the legislative process. Namely, the Treasury is required to read and consider all of the public comments submitted by January 7, 2021, the arbitrary date set by the rulemakers themselves.

They technically then have the power to issue the final rule, saying they considered all the comments, he said. But if its obvious that they didnt consider all the comments, which I feel like it would be if the final rule came out any time before the new administration comes in, it would be very easy to argue in court that the requirement to read and consider all the comments has not been met.

As it stands, Van Valkenburgh said it appears the outgoing administration intends to saddle the incoming administration with chaos.

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Bitcoin advocates revolt against the Trump administrations frantic crypto regulations - TechCrunch

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Finlands customs agency is preparing to cash in on a stash of drug-linked bitcoins thats now worth tens of millions of dollars.

Putting a price on the customs agencys 1,981 bitcoin appeared foolish at press time given how the market-leading cryptocurrency is soaring and crashing by the thousands seemingly every minute. Even so, with bitcoin trading hands above $35,000 for the past 24 hours, one could value Finlands trove north of $69 million.

The sale, which the agency is still planning out according to a Tuesday report in Helsingin Sanomat, will almost certainly realize gains far beyond what it expected when it seized the first 1,666 bitcoins from drug traders in 2016. Bitcoin was trading in the $600 range at the time and the stash was worth less than 1 million euros.

Fears of the bitcoin re-entering the drug trade had been holding up a sale ever since. But agents appear to have place their concerns aside; Pekka Pylkknen, CFO of Customs, said the agency will realize virtual currencies after talking it through with the Ministry of Finance.

No date has been set as of yet.

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Finland Pushes to Sell Tainted Trove of Bitcoins Worth Tens of Millions - CoinDesk - CoinDesk

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