One River Asset Management’s CEO says his firm now holds bitcoin worth “well over” $1 billion. He revealed that the institutional interest in bitcoin is “astounding,” noting that almost all major institutions in the U.S. are having discussions about the cryptocurrency. He believes that bitcoin will be worth more than gold, placing its value at approximately $500K.
One River Asset Management’s CEO Is a Bitcoin Bull
The CEO and co-founder of One River Asset Management, Eric Peters, shared his view on bitcoin at length in an interview with Bloomberg last week. Firstly, he revealed that his asset management firm now holds bitcoin “well in excess of a billion dollars at this point.” He then discussed the case for institutional investors to own cryptocurrencies currently.
“We are in a unique period right now,” Peters began. It is the period seen many times throughout history where “governments become extremely indebted, monetary policy becomes less effective, and ultimately governments … need to issue lots of debt and begin actually spending. Typically, when they do that, they try to unburden themselves from the debt they’re incurring by debasing the currency that they’re issuing that debt in.” The CEO added that “ultimately, those who hold that currency lose their spending power.”
He proceeded to talk about crypto assets, stating that they “are really interesting in the sense that they’re a new asset class altogether.” He noted that they “have some unique qualities, part of which resemble the qualities that you’d find in gold except that they’re wildly underpriced relative to gold.”
Moreover, bitcoin and other cryptocurrencies have “technology properties,” and “will look different tomorrow, and next year, and in a decade to come.” This makes bitcoin “unique to gold because if gold has looked the same two thousand or two billion years ago, then it will look the same in two thousand and two billion years from now,” the One River executive described, elaborating:
I think you have to be a real pessimist to think that an emerging technology platform doesn’t become more interesting, more useful, more valuable.
He further detailed that “It’s very rare that you find an asset that can kind of allow you to capitalize on future upside [the technologies] while also mitigating the downside [monetary debasement] like that.”
Peters also clarified that he always starts with the macro aspect when it comes to investing as he has been a macro investor his entire career. With technology, the CEO opined:
I’ve seen enough to know that, in essence, tomorrow is going to look better than today. When you’re investing, that’s incredibly important to know — does tomorrow look better, worse, or the same. I think I’ve seen enough to just understand that tomorrow looks better than today in these assets.
“We’re issuing enormous amounts of debt. We’re having our central bank buy them … the scale of it is just so profound … so the question is, in that environment, what are the assets that you can own,” he continued.
Peters proceeded to list some plausible investment options: equities, gold, and digital assets. He asserted that digital assets “are dramatically undervalued relative to some of these other stores of value,” which is why his firm is “excited” about this, emphasizing that “It’s just an undervalued asset for that macro backdrop.”
The One River CEO also praised bitcoin’s fixed supply. He stated: “It’s unlike any asset that I’ve seen in the world in the sense that there’s no supply response to the price. If bitcoin went up five times in value, or 10 times, or 100 times, there wouldn’t be more bitcoin produced. You can’t say that about really any other asset in the world.”
He also compared bitcoin to gold. “I think it will be worth more than gold at some point because gold is not infinite. Gold continues to increase in terms of supply,” he noted. In contrast, there will only be 21 million bitcoins. The CEO elaborated:
If it were just to go up to the market cap of all the gold in the world, it would go up to something in the order of $500,000 per bitcoin.
“Right now, it’s trading at let’s say $30,000, so if you look at it from a trader’s perspective there’s enormous convexity to the upside,” he affirmed.
Answering a question about how long it will take for bitcoin to become more valuable than gold, Peters said that it is “policy dependent.” He could see it happening in a number of years if we see “some type of next recession that is followed by even more issuance and more buying from the fed.” Nonetheless, he pointed out that “one of the things about these assets is … it doesn’t cost you anything to hold them. You have the price risk to the downside but you don’t have a negative carry.”
The One River executive also discussed whether crypto assets will appeal to institutional investors if they continue to exist alongside fiat money or whether institutions need to see some kind of government or central bank acceptance or endorsement before jumping in.
After he publicly revealed that his firm had invested about a billion dollars in bitcoin, he said that “the number of institutions that have been filling my day with calls and inquiries about this is astounding.” He reiterated that it is already happening “enormously.”
Peters expects the crypto asset class will “mature in a decade from now,” adding:
What’s happening is almost every big, credible institution in the U.S. is having discussions about this … Many of them are calling us to ask.
“They’re fascinated by this,” he further shared, emphasizing that “they should be because this is the first and last asset class that will appear in our lifetime.”
As for how the crypto landscape, including BTC, will look like a year from now, Peters said, “Prices will be higher.” While admitting that there will continue to be volatility, he believes that it will decrease the higher the prices are. He explained that as the prices rise, “you’re drawing in new types of investors, with stronger hands, quite frankly … so I think that over the next year, a lot of money will be drawn into these assets.”
He also believes that more regulations will come out in an effort to increase transparency for the whole crypto asset class but the regulators will not destroy the asset class because they understand that the future of finance will be digital.
Do you agree with One River’s CEO about bitcoin? Let us know in the comments section below.