Is It a Good Time to Go Long Bitcoin?

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Dec. 5 (Bloomberg) –- On today’s “Reganomix,” BOFA Merrill Lynch Head of Global Rates and Currencies David Woo discusses his price target for Bitcoin. He speaks with Trish Regan and Adam Johnson on Bloomberg Television's “Street Smart.” (Source: Bloomberg)

Of whether or not there is a bubble.

David wu.

Thank you.

I think it is fair to say that bitcoin is something totally new.

You can't basically give it a evaluation based on traditional metrics.

This is like a three-headed animal.

Let's take it apart and assign a value to each of the three pieces where we think bitcoin has a future.

The first piece is a means of payment on eerks commerce.

Let's assume that 10% of global ee commerce transactions go through bitcoin.

We think that would be worth $5 billion.

The second major role that bitcoin can play is as a basic means of transfer.

So like a western union?


What i did was take an average market cap of western union, money graham and euro nex.

I said what if bitcoin becomes a major player.

That gives me another $5 billion.

Theoretically that is something we should see happen.

It is very expensive to send money and there is a lot of time and process involved.

Here you can transfer money on line to a relative in another country seamlessly.


Say if you are a mexican construction worker in this country, and you want to send money home.

You want to send it cheaply, and you may not have a bank account.

For means of transfer, there is something to be said about bitcoin as a future.


the third a piece, the most interesting piece is bitcoin as a store value.

How do you think of that?

I think gold is a good example.

Gold has three things in come with bitcoin.

It has a fixed split.

Bitcoin has a relatively fixed supply.

Two, it doesn't pay any interest interest, and three it is relatively anonymous.

Right now bitcoin has a volatility about five times more than gold.

For gold, it was about $1.3 trillion.

You divide it by five and you get $300 billion.

It took a long time for gold to acquire this reputation.

It has stood had the test of time.


Let's say bitcoin manages to get only the status of silver in our lifetime.

Silver is trading 1/60th value of gold.

That is another $5 million to the account.

That comes to $15 billion.

Right now the outstanding thing, bitcoin is $12 million, you get to $1,300. in u.s. dollar terms, you are saying the $15 billion market divided by the number of bitcoins gets you to a value of around $1,200? yes.

I am not saying $1,200 or $1,300 is a forecast.

It is a max fair value.

You have to have 10% of ee commerce players.

It is going to be one of the big players in the money transfer entry and is going to be like silver.

So you go long bitcoin and short western union?

We are not making that official call yet.

This is something interesting.

So you point to the volatility.

Gold obviously also is a pretty volatile space to be in.


Depending on people's fear level tend to move higher when people are concerned about the future.

Is that something that we might see with bitcoin as well?

I think that is exactly right.

In some sense bitcoin's role as a store value is compromising its main role as a means of exchange.

That is already undermining its role.

Amazon is not going to accept bitcoins -- if your best case fair vull is $1,300, and we are there, you are saying you don't want to necessarily go long on bitcoin?


I 0 duncan bitcoin may grow as a means of exchange.

That is different than saying bitcoin is going higher.

You have to assume that bitcoin is going to become a major player in other domains.

From that point of view these expectations are lofty.

But you would never see amazon accepting gold as tender.

Why would we ever get to a stage where this is really something that people trance act in readily online?

Well, in china for example, one company is accepting bitcoin as payment.

Not anymore, they have outloud it.

No, for instance tutions.

They are not saying you can't pay for something online.

That is a different story.

Generally speaking, i think bitcoin has a role to play in countries where citizens face high taxes, high capital controls or confiscation risk.

From that point of view that is interesting.

You have mentioned china.

They have come down pretty hard on bitcoin.

I think so.

70% of the recent turnover in bitcoin exchange basically involved a cnyb on the other side.

This has become an object of speculation in china just like other things, even garlic in china.

People have made comparisons to tulips.

There was a professor in the netherlands who made this comparison just this week.

You would say no, don't worry about that it, is not a tulip?

I think right now add today's level, a,000, you can't say clearly it is a bubble.

This is where i would disagree with green span.

This piece makes that point

This text has been automatically generated. It may not be 100% accurate.


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