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Why Paul Tudor Jones Still Has Money in Bitcoin

In a recent interview with CNBC’s Squawk Box, Paul Tudor Jones (PTJ) reiterated his support for bitcoin. In 2020, the legendary investor publicly revealed a bullish stance on cryptocurrency as an inflation hedge and a digital version of gold.

Paul Tudor Jones commented on the current macroeconomic outlook and the issue of high inflation causing financial headwinds around the world. The US Federal Reserve (Fed) is trying to alleviate this problem by raising interest rates. So far, their methods seem ineffective.

In this sense, Paul Tudor Jones compared inflation to “toothpaste”, he said: “Once out of the tube, it is difficult to put it back”. Bitcoin, Ethereum and cryptocurrencies will continue to shine in this environment as the global economy faces a potential recession.

Paul Tudor Jones: The market has changed, Bitcoin will create value

As the Fed tries to fight inflation and assets are pushed lower by high interest rates, Paul Tudor Jones spoke about the different conditions for investors. Over the past few years, equities and risky assets have experienced an influx of capital at certain times of the year.

This allows financial assets to skyrocket as people invest their money in stocks, bitcoins, and other assets. In a high interest rate environment, investors will feel more inclined to conserve cash and avoid risk. This could limit the ability of financial assets to follow their regular cycle.

In that sense, the legendary investor spoke of creating a new normal as Fed monetary policy goes off the rails. The financial institution is trying to get the economy back on track, but PTJ has questioned the Fed’s pace because it says it might be moving too fast.

These conditions, high inflation mixed with a Fed moving too quickly for the sake of financial assets, could be good for Bitcoin and crypto. In the coming decades, the Fed and other central banks could wind down their “monetary policy experiment,” PTJ said, leading to a period of lower liquidity and economic austerity.

In the long run, these financial institutions will stop fueling inflation with more money to create confidence in the value of their currencies. Bitcoin will benefit from both situations, a period of more money and a period of “tax restraint”. Paul Tudor Jones said:

I have always had a small bitcoin allocation (…). Whoever is president of the 24 will have to deal with debt dynamics that are so serious. We are going to have to make budget cuts. At a time when there is too much money, something like crypto, especially Bitcoin and Ethereum, will have value at some point.