Paul Tudor Jones has revealed that he is buying bitcoin as a hedge against inflation.
The American hedge fund manager, founder of Tudor Investment Corporation and the seventh most profitable hedge fund manager in the world, stated in a note entitled “The Great Monetary Inflation”:
“The best profit-maximizing strategy is to own the fastest horse. If I am forced to forecast, my bet is it will be Bitcoin”.
Tudor Jones is concerned about the inflation that could be caused by the massive new money printing campaign led by the Fed central bank, saying that bitcoin today reminds him of the role of gold in the 1970s.
However, he said that his Tudor BVI fund is expected to hold only a small percentage of its assets in Bitcoin futures, less than 10%.
He is one of the first major hedge fund managers to opt for a similar solution, which has so far been widely snubbed by traditional managers.
According to his calculations, 3.9 trillion dollars, or the equivalent of 6.6% of world economic output, have been created out of thin air by the Fed since February, and this huge release of dollars could end up generating inflation and reducing its value.
In comparison, the amount of BTC created during the same period is practically insignificant.
“It has happened globally with such speed that even a market veteran like myself was left speechless. We are witnessing the Great Monetary Inflation — an unprecedented expansion of every form of money unlike anything the developed world has ever seen”.
To hedge against these risks, Tudor Jones revealed that he had considered various alternatives, such as gold, treasury bonds, certain types of stocks, currencies and commodities, but eventually recognized a “growing” bitcoin role in this.
Actually, he has been operating in the crypto market since 2017, but only on a personal level and for mere speculation. Now, instead, he wants to use bitcoin as a store of value for his fund, due to its characteristics of maintaining purchasing power, reliability, liquidity and portability.
Jones argues that investors, given the current anomalous and particular situation, should throw away the financial playbook of the last decade and go back to Milton Friedman’s original monetarist theories and old-school indicators such as the M2 money supply.
Jones has also said that he remains a fan of gold, suggesting that if we go back to the extremes of 1980, its price could rise to $2,400 or even soar to $6,700.
In addition, Jones believes it is possible that the Fed’s monetary policy could become a political instrument in the hands of the country’s political administration, which could further promote the development of a real inflationary policy on the US dollar.