Bitcoin bull is under watch.
Mark Yusko, a hedge fund manager, believes that investors will profit from the sharp rise in the cryptocurrency over the past few weeks.
“There are a lot of people who think we can hit $100,000 by the end of the year. The stock-flow model says we should,” Morgan Creek Capital Management CEO and CIO told CNBC’s “Trading Nation” on Friday. “I also wouldn’t be surprised by a bit of consolidation. Look, we’re up 40% this month just 15 days ago.”
Bitcoin crossed the $60,000 mark for the first time since April on Friday. The upward movement came amid excitement surrounding the advance in Bitcoin ETFs.
“We are excited, obviously, that people are realizing that approval is likely imminent,” said Yusko, managing partner of Morgan Creek Digital.
However, he questions the sustainability of the latest performance.
“The pause being updated given how overbought we are now wouldn’t surprise me,” Yusko said. “There is some risk of buying the rumor, selling the news.”
According to Yusko, any profit taking will be temporary. His call is for Bitcoin to reach $250,000 in five years.
“It’s classic supply and demand,” he said. “One of the good things about bitcoin as an asset is that it has a limited supply.” “We know every day for the next 140 years how many bitcoins will be minted through the mining process.”
Within five years, Yusko estimates that bitcoin’s value by market capitalization will be equal to gold.
Yusko noted, “I think bitcoin has replaced gold. It is now digital gold.” “It’s perfect store value.”
Part of his logic surrounds forecasting a long-term downturn. It is a rarely talked about scenario as the world adjusts to rising inflation and a supply chain crisis.
Yusko stresses that upward price pressures are a quick reaction to the massive global economic shutdown of Covid-19.
“I think the likelihood of us having a full inflation period is really low,” he said. “It’s normal that we’re in a deflationary death spiral. It’s been going on for two decades.”
He points to an aging population and the impact of massive virus aid measures as major triggers.
“We have a bad demographic, a lot of people are reaching retirement age. We have too much debt,” Yusko said. “All of this leads to deflation.”
Disclosure: Yusko owns shares of bitcoin, etherium, gold, and Coinbase.