Reflecting on some of his biggest trades, macro investor and hedge fund manager Paul Tudor Jones referred to bitcoin (BTC) as one of the "knockout opportunities," calling it "unequivocally, the best inflation hedge that there is."
Speaking with Patrick O'Shaughnessy on the Invest Like the Best podcast on Tuesday, the founder and chief investment officer of Tudor Investment Corp. said big moves typically occur when markets become stretched, imbalances persist, or policymakers make mistakes.
"So you're looking for something that's underowned, undervalued, way out of whack, people have gotten complacent on it, and you're looking for that catalytic moment," he said.
Jones first made the case for owning bitcoin as a hedge against central bank money printing in 2020, confirming he had between 1% and 2% of his assets in bitcoin at the time. A year later, he said that he liked bitcoin as a portfolio diversifier and wanted to allocate 5% of his assets into the cryptocurrency.
In 2020, following substantial fiscal intervention by both the Federal Reserve and the U.S. Treasury, "you just knew that the inflation trades were going to take off," Jones said in the Tuesday interview. "And what was, of all of them, what was the best one at that point in time? It was bitcoin."
Jones argued that bitcoin remains a better inflation hedge than gold due to its fixed supply, capped at 21 million BTC, with less than 1 million BTC left that can be mined.
"Gold increases supply every year by a couple of percent. Bitcoin, there's a finite amount that can be mined. It's decentralized. And so in that sense, it has the greatest scarcity value of anything," he said.
However, Jones said bitcoin's weakness as an inflation hedge would emerge in a "kinetic" conflict involving cyber warfare, where "anything that you have to deal with electronically is going down, including Bitcoin."
Jones also flagged quantum computing as a longer-term risk.
"Who knows if and when, with AI advancing as fast as it is, we may actually have quantum computing, where someone can come in and can hack any bank and hack anything they want to," he said.
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