Guggenheim Partners CIO: Crypto Will Be ‘Transformative’ to the General Economy

On Wednesday (14 December 2022), Scott Minerd, Global Chief Investment Officer of Guggenheim Partners, shared his thoughts on crypto.

Minerd is also the Chairman of Guggenheim Investments, which is “the global asset management and investment advisory division of Guggenheim Partners and has more than $233 billion in total assets across fixed income, equity and alternative strategies.” Guggenheim Investments focuses on “the return and risk needs of insurance companies, corporate and public pension funds, sovereign wealth funds, endowments and foundations, wealth managers and high net worth investors.”

On 16 December 2020, after the Bitcoin price had finally broken through the $20,000 level on all crypto exchanges to set a new all-time high, Minerd, the Guggenheim CIO, talked about Bitcoin during an interview on Bloomberg TV.

The interview started by the Guggenheim CIO being asked by Scartlet Fu, Bloomberg TV’s Senior Editor of the Markets Desk, about the Guggenheim Macro Opportunities Fund and the decision by its managers to invest “up to 10% of its net asset value in Grayscale Bitcoin Trust.” In particular, he was asked if Guggenheim had started buying Bitcoin yet and how much this decision was “tied to the Fed’s extraordinary policy.”

Minerd replied:

To answer the second question, Scarlett, clearly Bitcoin and our interest in Bitcoin is tied to Fed policy and the rampant money printing that’s going on. In terms of our mutual fund, you know, we are not yet effective with the SEC. So, you know, we’re still waiting.

Of course, we made the decision to start allocating toward Bitcoin when Bitcoin was at $10,000. It’s a little more challenging with the current price closer to $20,000. Amazing, you know, over a very short period of time, how big run-up we’ve had, but having said that, our fundamental work shows that Bitcoin should be worth about $400,000. So even if we had the ability to do so today, we’re going to monitor the market and see how trading goes, what evaluation that ultimately we have to buy it.

He then explained how they came up with the $400K valuation for Bitcoin:

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.

On 25 June 2021, however, the Guggenheim CIO seemed super bearish on Bitcoin, at least in the short to medium term. During an interview on CNBC, Minerd said that he expected the Bitcoin price to head lower and that investors need not be “anxious in putting money in Bitcoin now” since he believes that the Bitcoin price will be in consolidation mode for a couple of years before it heads higher.

This was his prediction for when Bitcoin would bottom:

The real bottom, when you look at the technicals, $10,000 would be the real bottom, you know, that’s probably a little extreme, so I would say $15,000.

Then, on 18 October 2021, when Bitcoin was trading around the $62,000 level, CNBC interviewed Minerd, who was speaking at the Milken Institute Global Conference (held 17-20 October 2021 in Los Angeles).

According to a report by CoinDesk, Minerd explained to CNBC why he was no longer invested in Bitcoin:

The one thing I learned as a bond trader years ago, when you don’t understand what’s happening, get out of the market… So discipline tells me now I don’t fully understand this.

This is what he had to say about the Bitcoin price prediction he made in June:

We were long going into that, we sold, it pulled back to where I thought it was and really after looking at it thought you know, we gonna probably go lower. Well, we didn’t, so we’re not in.

Well, two days ago, during an interview on Bloomberg Television, Minerd had this to say about crypto:

A year ago, we were talking about crypto and there were approximately 19,000 coins, to which my comment was ‘this is mostly crap and there’s going to be a washout and just like the internet bubble, we will have survivors’… The digitalization of currency is just in its infancy. And how this evolves now is going to require a regulatory framework to legitimize it. And I think we will move forward, and I think this will be transformative to the general economy.

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