Paul Tudor Jones Buys Bitcoin as an Inflation Hedge. Should You?

It has been widely reported that Paul Tudor Jones is buying Bitcoin as a hedge against inflation apparently picking crypto over the more plebian gold.

Jones is a well-known investor and hedge fund manager Tudor Management Corporation that is worth a reported $5 billion or so. In a report by Bloomberg, Jones said.

“The best profit-maximizing strategy is to own the fastest horse … If I am forced to forecast, my bet is it will be Bitcoin … “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.”

Of course, Jones is a reference to the central bank printing presses that are running at full steam with no end in sight. While the COVID-19 pandemic is unprecedented in its impact on global markets and requires a full-court press by governments around the world, eventually that money will need to be paid back. The debate swirling around interest rates and inflation has been ongoing for years. Everyone knows that inflation will show its ugly face at some point in the future – it is just a question of when. As huge injections of fiscal and monetary adrenaline hit the system the economy will change. Many, if not most, observers, see inflation as an inevitable outcome. So is Bitcoin a hedge?

The limited supply of the world’s most popular digital currency positions it well as a counterbalance to reserve fiat currencies that are being magically created at an astounding pace. The Bitcoin “halving” event is taking place this week thus reducing the crypto’s ability to spawn more BTC. Unlike Gold, a commodity that sits in a vault somewhere that is carted between rooms as owners change, Bitcoin can be seamlessly transferred around the globe and actually spent to purchase goods. So is Bitcoin a better bet than gold? Well, Jones thinks so, it seems.

But there are always two sides to an investment strategy. Buyers and sellers always disagree and that is how markets are made. My favorite tweet today is from a Bitcoin holder (since 2015) that decided to sell all of his crypto this week, perhaps guaranteeing himself as a twitter meme.

 


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