Guggenheim CIO: Bitcoin’s Investor Base Not Big or Deep Enough to Support Current Valuation
Scott Minerd’s bearish calls started coming right after BTC hit ATH at $42k, less than a month after he called for $400k per BTC when Bitcoin was at $19k. Most importantly, his firm’s filing with the SEC to invest in Bitcoin won’t get effective until Jan. 31st.
Guggenheim’s Scott Minerd can’t seem to shake off his bearishness.
In his latest interview with Bloomberg, Minerd said the current institutional demand for Bitcoin isn’t enough to sustain the digital asset’s prices above $30,000.
He shared that he has been “looking at crypto for years” but said, “It just didn't have a big enough market cap to justify the attention of institutional money.” That changed when Bitcoin hit $10,000 with a clear path to $20k.
“Once you got past $20,000 you know you could definitely see based on technical work you could get to 35,000 or maybe even higher.”
“Right now, the reality of the institutional demand that would support a $35,000 price or even a $30,000 price is just not there,” said Minerd, the firm’s chief investment officer.
“I don’t think the investor base is big enough and deep enough right now to support this kind of valuation,” he added in the same sentence he mentioned the world’s largest asset manager with $8.67 trillion AUM, BlackRock filing to start buying cryptocurrency.
This bearishness from Minerd was in line with his calls throughout this month when he urged people to take profits from the table and predicting the end of this market cycle that means the price going back to $20k.
As we have been reporting continuously, these bearish calls started coming after Bitcoin hit its all-time high at $42,000 on Jan. 8. Just last month, when the price of BTC went from about $19k to past the previous peak of $20k, Minerd called for $400,000 per BTC. “Our fundamental work shows that Bitcoin should be worth about $400,000,” said Minerd at the time.
“It’s based on the scarcity and relative valuation such as things like gold as a percentage of GDP. So you know, Bitcoin actually has a lot of the attributes of gold and at the same time has an unusual value in terms of transactions.”
Interestingly, while Guggenheim has purchased Bitcoin in their private funds, it has yet to be effective for their mutual funds, which will be by the end of this month, Jan. 31st, just two days after the monster 120k Bitcoin options expiry. So, a dip would work in the firm's favor.
While mainstream media is calling out the slowdown in institutional demand, it was ongoing, as evident from the record flow in Bitcoin funds last week. Institutions continue to buy the dips, which have already been called by the crypto market as 30% to 40% have been the norm during the 2017 bull market as well.
Bitcoin is still a viable asset class, in the long run, said Minerd.
He further commented on GameStop, the heavily shorted company which is being pushed to the moon by retail traders. “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.”