The hedge fund legend Paul Tudor Jones sent shockwaves through the investment world on Thursday, with the announcement that he’s buying Bitcoin futures.
Jones is among the first major hedge fund managers to make a strong case for the leading cryptocurrency.
His investment thesis takes a deep dive into why BTC may emerge as a leading hedge against the inflation that Jones believes will follow the rapid increase in money-printing from central banks.
“Just since February, a global total of $3.9 trillion (6.6% of global GDP) has been magically created through quantitative easing. We are witnessing the Great Monetary Inflation (GMI) — an unprecedented expansion of every form of money unlike anything the developed world has ever seen…
Quite often, how the markets respond will be at odds with your priors. But remember, the P&L always wins in the long run. With that in mind, in a world that craves new safe assets, there may be a growing role for Bitcoin.”
Jones is careful to point out that he’s not exactly the usual demographic of the average cryptocurrency investor.
Rather, he’s looking to take a practical approach to analyzing its potential to be a store of value similar to gold.
“Truth in advertising, I am not a hard-money nor a crypto nut. I am not a millennial investing in cryptocurrency, which is very popular in that generation, but a baby boomer who wants to capture the opportunity set while protecting my capital in ever-changing environments. One way to do that is to make sure I am invested in the instruments that respond first to the massive increases in global money…
At the end of the day, the best profit-maximizing strategy is to own the fastest horse. Just own the best performer and not get wed to an intellectual side that might leave you weeping in the performance dust because you thought you were smarter than the market. If I am forced to forecast, my bet is it will be Bitcoin.”
Jones also points to Bitcoin’s fixed supply of 21 million coins as a singular feature that makes the leading cryptocurrency stand out among all other assets.
And the number one reason he’s bullish on Bitcoin is because the digitization of currency has officially arrived, with Bitcoin well-positioned to capitalize on the global shift spurred by the coronavirus.
“The most compelling argument for owning Bitcoin is the coming digitization of currency everywhere, accelerated by COVID-19…
The probable introduction of Facebook’s Libra (whose value will be pegged to the US dollar and will not be a store of value in that sense) as well as China’s DCEP, also tied to the yuan, will make virtual digital wallets a commonplace tool for the world. It will make the understanding, utility, and ease of ownership of Bitcoin a much more commonplace option than it is today.”
You can check out the full investment thesis here.