REUTERS/Brian Snyder
- Mark Yusko, CEO and CIO at Morgan Creek Capital Management, is "hyperbullish on bitcoin" due to its network, store of value, fundamental growth metrics, and ability to mitigate income inequality.
- Over the next 10 years, Yusko thinks bitcoin could reach $500,000 due to the confluence of these factors drawing investors to the space, rivaling the market capitalization of gold.
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Nothing seems to conjure up a more visceral reaction amongst investors than talk of cryptocurrency. Specifically, bitcoin.
The divide between those who think that bitcoin is a nefarious scam and the ardent HODLers — a slang term the crypto community has bestowed upon those with a buy-and-hold approach — is massive. Some say crypto is the way of the future and will revolutionize the world, while others see its implosion in the near future.
It's safe to say that Mark Yusko — CEO and chief investment officer at Morgan Creek Capital Management, where he oversees $1.5 billion — aligns his views with the former.
"Blockchain technology — and bitcoin in particular, as the first manifestation of blockchain technology — is really still in its infancy," he said in an exclusive interview with Business Insider. "It really is about the growth mindset and focusing on the venture capital upside or the asymmetric upside of the asset at this point."
It's important to note that Yusko didn't always have deep convictions in the cryptocurrency space. In fact, he started out extremely skeptical. However, when he started learning more about the space, growth metrics, and the potential bitcoin had to uproot the traditional finance system he became comfortable with an investment.
Today, he's all in.
"The key to bitcoin is the network," he said. "It grows in proportion to the inverse of the sum of the squares of the number of participants. That's Metcalfe's Law."
Put briefly, the network becomes more valuable as adaptation grows — and bitcoin's network is exactly where Yusko sees pay dirt.
He notes that the number of wallets that own bitcoin has gone up every year for 11 years, the transaction rates — along with the number and size of blocks — have been increasing, and the annual low-price for bitcoin has been higher 10 out of 11 years.
"All of the fundamentals of the value of the network are rising — and they're rising exponentially," he said. "And so you're getting this parabolic growth curve."
But that's not the end of his forecast.
According to Yusko, this network — which he says is the most powerful and secure computing network in the history of mankind — will help to reduce income inequality.
"The government and the elites want to have all the wealth, so they manufacture inflation and the wealth flows to top," he added. "And that's why we have the greatest wealth inequality in the history of mankind."
He continued: "Bitcoin helps solve that because now we can opt-out as an owner of assets from that fiat system."
With all of that under consideration, Yusko bolsters his thesis with a gold comparison. He says bitcoin "is even better than gold."
Theoretically speaking, since there are a finite number of bitcoins available — 21 million — it should serve as a better store of value than gold, which can be mined at any time. This additional level of scarcity makes bitcoin more valuable in Yusko's eyes — and that's barring the cumbersome nature of hoarding physical gold from the conversation.
"Between now and 2021, we're likely to see $100,000 bitcoin," he said. "By 2025, we're likely to see $250,000 bitcoin, and then sometime out 2030 we could see $400,000 or $500,000 bitcoin as it reaches gold equivalence."
See Also:
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- 2 investment chiefs who helped swell $65 million in firmwide assets to $940 million describe their Warren Buffett-inspired approach to investing — and explain why traditional market metrics are 'irrelevant'
