Bitcoin’s worth motion is approaching the realm of the bubble
Jeffrey Gundlach, CEO of DoubleLine Capital, warned on Monday that Bitcoin could overheat after its massive run in recent months.
“I don’t like Bitcoin here. I don’t like things that stand on such a stilt,” said the so-called Bond King in CNBC’s “mid-term report”. “Bitcoin is kind of a bubble area to me now in terms of the way it behaves.”
Gundlach’s comments on Monday came when the price of Bitcoin fell sharply to below $ 33,000 per digital coin. The cryptocurrency hit a new record high of nearly $ 42,000 on Friday before pulling back. However, Bitcoin is still up over 75% last month and more than 380% since April 1st.
The big rally at Bitcoin took place against the backdrop of the coronavirus pandemic. Governments around the world have launched massive stimulus measures to support troubled economies. This has led to inflation concerns for some investors, and Bitcoin has been an asset they turned to.
The increasing adoption of Bitcoin in general by institutional investors was another factor that helped fuel the rise. And some people, like prominent value investor Bill Miller, believe that digital coin has even more wiggle room – while admitting its volatility is likely to persist.
“The total supply of Bitcoin is growing less than 2% annually and the price shows that demand is growing much, much faster,” Miller told CNBC on Friday. “As long as that is achieved, Bitcoin will likely go higher and perhaps significantly higher.”
Gundlach acknowledged that bitcoin bulls could potentially be proven correct.
“The people who point this out have an enormous dynamic between supply and demand. If institutions actually get involved, they are right,” said Gundlach. “That is what this massive uptrend in Bitcoin can do.”
In January 2020, Gundlach predicted a short-term upward trend for Bitcoin, which could potentially be as high as $ 15,000 per coin per year.
In other cases the investor took a more negative opinion. For example, in December 2017, Gundlach said, “If you sell Bitcoin today, you will make money.” At the time, Bitcoin was trading above $ 16,000 per coin. It would fall dramatically, losing well over half of its value by December 2018.
Gundlach explained his current stance on Bitcoin on Monday, fearing that investors had become too optimistic.
“I think all of these things are kind of branded right now and the trading location is bad,” he said. “Even the dollar, I’ve been very negative against the dollar since January 2017, but I’ve actually gotten a little less neutral against the dollar than I am now … just because these things seem like they have become.” deep into the consensus narrative. “
“There are times when … people seem so on one side of the boat that I just don’t think the boat can sell that well,” added Gundlach, “and I believe Bitcoin there on the bullish side is right now. “