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Paul Tudor Jones Buys Bitcoin as a Hedge Against Inflation

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Paul Tudor Jones Buys Bitcoin as a Hedge Against Inflation

  • Becomes one of first big-name investors to embrace crypto
  • Macro investor sees Bitcoin as hedge against inflation
Paul Tudor Jones
Paul Tudor Jones Photographer: Michael Nagle/Bloomberg
Paul Tudor Jones
Photographer: Michael Nagle/Bloomberg

Macro investor Paul Tudor Jones is buying Bitcoin as a hedge against the inflation he sees coming from central bank money-printing, telling clients it reminds him of the role gold played in the 1970s.

“The best profit-maximizing strategy is to own the fastest horse,” Jones, the founder and chief executive officer of Tudor Investment Corp., said in a market outlook note he entitled ‘The Great Monetary Inflation.’ “If I am forced to forecast, my bet is it will be Bitcoin.”

Jones, who said his Tudor BVI fund may hold as much as a low single-digit percentage of its assets in Bitcoin futures, becomes one of the first big hedge fund managers to embrace what until now has largely been a financial fad with few mainstream advocates. He said he was motivated to take a hard look at Bitcoin after considering the implications of massive fiscal spending and bond-buying by central banks to combat the coronavirus pandemic.

By his calculation, $3.9 trillion of money, the equivalent of 6.6% of global economic output, has been printed since February.

“It has happened globally with such speed that even a market veteran like myself was left speechless,” Jones, 65, wrote. “We are witnessing the Great Monetary Inflation -- an unprecedented expansion of every form of money unlike anything the developed world has ever seen.”

The question for a macro investor like Jones was how to hedge. He said he considered various bets on gold, Treasuries, certain types of stocks, currencies and commodities.

Jones first dabbled in Bitcoin in 2017, doubling his money before exiting the trade near its peak at almost $20,000. This time, he said he evaluated Bitcoin as a store of value and decided it passes the test based on four characteristics: purchasing power, trustworthiness, liquidity and portability.

“I am not a hard-money nor a crypto nut,” he wrote. “The most compelling argument for owning Bitcoin is the coming digitization of currency everywhere, accelerated by Covid-19.”

Read more: Bitcoin Is Staging a Comeback Reminiscent of 2017 Bubble Frenzy

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