Bitcoin has fallen more than 50% off its November 2021 highs, but long-term investors should not be worried about the cryptocurrency’s ability to reach its maximum potential, said Anthony Scaramucci, founder of SkyBridge Capital and former White House Communications Director.
Scaramucci was previously a critic of cryptocurrencies but has since changed his mind on digital assets. Now, SkyBridge Capital manages funds that invest directly into Bitcoin and cryptocurrency companies.
The First Trust SkyBridge Crypto Industry and Digital Economy ETF has $6.4 billion in assets under management as of June, 2021.
Speaking to Michelle Makori, editor-in-chief of Kitco News, Scaramucci said that Bitcoin’s true value lies in its growing network.
“Fundamentally, you can value Bitcoin related to the network. Remember what Robert Metcalfe, the MIT professor, once said, the fax machine is probably worthless but 100 million of them is probably worth something. The network itself is worth something,” he said.
The price of Bitcoin will eventually rise to a point where the market value of Bitcoin will surpass that of gold’s he said.
“When you just look at it from a box checking exercise about store of value, Bitcoin hits more of those than gold does, but again, it’s early. And so, it’s an early adoption story, it’s going to come with volatility. I believe that when Bitcoin is mature, it will be more valuable than gold because of all the technical properties associated with it. 10 years from now, I’ll make a prediction, that Bitcoin has a larger market capitalization than gold. It took gold 5,000 years to get to its current market capitalization. Bitcoin will surpass that in under 25 years from its inception,” he said.
Most estimates have the total circulating market value of gold at around $11 trillion to $13 trillion.
“I ultimately think that Bitcoin will be worth a half a million dollars and it takes four to five years. The ride will be rocky, but it will certainly be worth it,” he said.
Importantly, the user base of Bitcoin will eventually grow to more than a billion people worldwide as adoption takes off, Scaramucci said.
On the economy, Scaramucci said that inflation will eventually come down.
“I’m in the outlier community. I think that this is a supply chain issue and I do think that it’s transitory. Now, it just happens to be longer than the word transitory’s definition,” he said.
Furthermore, expectations of three to four rate hikes this year from the Federal Reserve are overly aggressive and hawkish, Scaramucci noted, given that technological developments are in fact deflationary for the economy and the Fed will respond to these deflationary forces appropriately.
“Technology is primarily deflationary. So, I think that Jerome Powell is going to surprise to the upside and I don’t see four to six interest rate hikes this year. You may get one or two, but I don’t think you’re going to get much more than that,” he said.
Bitcoin is not yet an inflation hedge, Scaramucci added.
“I don’t see [Bitcoin] as an inflation hedge. What I see Bitcoin as is an early adopting technological asset. I see this as a technology that has 2.5% global saturation and as a result of which, if you study other technology like this, they come with a very high oscillation and very high volatility,” he said.
Scaramucci compared Bitcoin to Amazon when it first IPOed, when the stock was very volatile, but has since matured and now see lower volatility.
For more information on Bitcoin and the economy, watch the video above.
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