One River CEO: ‘Bitcoin Will Be Worth More Than Gold’

Bitcoin is about 12 years old but it’s still just the beginning for the digital asset, according to One River Asset Management CEO Eric Peters. Institutional investors should learn as much as they can now before it “matures,” he said. Peters, […]

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Eric Peters | Source: AllianceBernstein

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key takeaways

  • Peters called bitcoin “wildly underpriced” compared to gold
  • Eventually, Peters sees a mature market for bitcoin

Bitcoin is about 12 years old but it’s still just the beginning for the digital asset, according to One River Asset Management CEO Eric Peters. Institutional investors should learn as much as they can now before it “matures,” he said.

Peters, who is also the chief investment officer at the $1.1 billion-asset firm, also said bitcoin is “wildly underpriced relative to gold” and that it will ultimately “be worth more than gold” because of its fixed supply (21 million) and it’s perfectly inelasticity, in an interview Thursday at Bloomberg’s The Year Ahead virtual conference.

“In a world where there is abundance in all things, we have a unique asset here in bitcoin, which has limited supply,” Peters said. “It’s unlike any asset I’ve seen in the world in the sense that there’s no supply response to the price.”

Specifically, he added, even if the price of bitcoin rises, there won’t be more bitcoin produced as a result – no matter how much it rises.

One River Asset Management, which specializes in volatility and trend following strategies, made waves last month when it bought more than $600 million in cryptocurrencies. Peters created a new company, One River Digital Asset Management, which was expected to hold about $1 billion of bitcoin and ether by early 2021. Alan Howard, co-founder of Brevan Howard Asset Management, is among the backers of the new firm.

Gold vs bitcoin

Peters said bitcoin has qualities it shares with gold but is more unique because of its technology properties, which he said are bound to become more interesting, useful and valuable.

“Bitcoin is a technology platform, it will look different tomorrow, next year and in a decade to come, relative to how it looks now,” Peters said. “Gold looked the same 2,000 and two billion years ago and it will look the same 2,000 and two billion years from now.”

Because bitcoin is an emerging technology platform as well as an asset, investors can generate returns and invest in future opportunity while also helping mitigate the risk of “poor policy decisions we’ve made in the past,” Peters said.

“The probability of the U.S. reversing its policy of trying to debase the currency it’s issuing debt in is virtually zero,” he said. “Politicians and policymakers think they can proceed with this large issuance and monetization of debt and debasement in a very gradual way… It’s rare to find an asset that can allow you to capitalize on future upside while also mitigating the downside.”

On Wednesday U.S. Federal Reserve Chairman Jerome Powell said it’s too soon to say when to start tapering the central bank’s $120 billion-a-month asset purchases, that he’s more concerned about recovering “people’s careers and lives” and that the Fed would frankly “welcome higher inflation.”

Peters’ comments echo a recent interview with hedge fund mogul and founder of Elliott Management Paul Singer. The long time monetary critic lambasted central banks for driving down the yields on long-term sovereign bonds, making them a “senseless” trade.

When will there be a mature market for bitcoin?

It’s only a matter of time – a decade, specifically – before bitcoin inevitably matures, Peters said. One River has been seeing overwhelming demand for digital assets, but the level of interest doesn’t match the allocations, although those could start small and increase over the next decade.

Bitwise recently found a similar trend among financial advisors, where half of those surveyed indicated they think the price of bitcoin will go up and 15 percent think it will triple – but just 9 percent actually allocating to digital assets in client portfolios.

“There’ll be all kinds of opportunities in this asset class so it’s very important for folks whether they allocate a significant portion or some modest proportion of their portfolio it’s important because you get to start learning,” he said.

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