Bitcoin prices pulled back from their all-time highs above $23,000 on Friday, but the Grayscale Bitcoin Trust (OTC: GBTC) traded higher by 1.7% on investor optimism that the huge 2020 bitcoin rally will spill over into 2021.

Former hedge fund manager Whitney Tilson predicted the bursting of the bitcoin bubble back in 2017, but Tilson has a different take on the cryptocurrency this time around. On Friday, Tilson said he doesn't recommend shorting bitcoin or any other cryptocurrency, even at all-time highs.

Related Link: Will Bitcoin 'Rise 50% And Possibly Double' In 2021? These Pros Think So

Back in 2017, Tilson said bitcoin was demonstrating signs of a classic market bubble. One of the biggest red flags at the time was the type of investors that were asking questions about bitcoin. Tilson noted that 2017 bitcoin investors were among the “least-knowledgeable investors imaginable.” This time around, Tilson said much more mainstream investors and firms are involved in the bitcoin rally, which suggests the 2020 gains may be more likely to hold.

How To Play It: While 2021 may not bring another 2018-style bitcoin bubble bursting, Tilson still isn’t recommending investors buy bitcoin.

“I would never short any cryptocurrency – ironically, for the exact same reason I would never own one: there's no intrinsic value,” Tilson said.

Without any intrinsic value, Tilson said the price of bitcoin could literally go anywhere from $100 to $1 million and anywhere in between. Tilson said it’s never a good idea to short an open-ended situation like that, but there is also nothing supporting bitcoin’s valuation to the downside.

“In summary, I think you will lead a happier and more prosperous life if you avoid cryptocurrencies altogether,” Tilson said.

Benzinga’s Take: Stocks, bonds, real estate and even gold have long, well-established track records of investment performance, but bitcoin and other cryptocurrencies have only been around for a little over a decade.

A cryptocurrency’s supply is fixed, it doesn’t have the intrinsic value of a share of stock or a plot of real estate, and it doesn’t have the yield of a bond or certificate of deposit. Therefore, the prices of cryptocurrencies in the long term will be determined only by changes in long-term demand from investors and users.

Latest Ratings for GBTC

View More Analyst Ratings for GBTC
View the Latest Analyst Ratings

See more from Benzinga

• Click here for options trades from Benzinga

• Will Bitcoin 'Rise 50% And Possibly Double' In 2021? These Pros Think So

• Bitcoin Crosses K For The First Time. Is This Rally A Repeat Of 2017?

© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.