Billionaire investor Paul Tudor Jones said Bitcoin stands out as the strongest hedge against inflation, citing its fixed supply as a key advantage over traditional assets like gold.
“Bitcoin is unequivocally the best hedge against inflation there is – more so than gold,” Jones said in an interview with the Invest Like the Best podcast published Tuesday. He pointed to the capped supply of the largest cryptocurrency. Unlike gold, whose supply increases every year, bitcoin has a strict limit on the number of coins that can be created, making it by design rarer, he said.
Jones presented the appeal of Bitcoin through the prism of past market cycles. During periods of aggressive monetary and fiscal stimulus, such as after the March 2020 pandemic crash, he said inflationary trades tend to emerge as central banks inject liquidity into the system.
“When you saw all the interventions… you just knew inflationary trading was going to take off,” he said, adding that bitcoin was the most compelling opportunity at the time.
His bullish view on Bitcoin contrasts with a more cautious stance on stocks. Jones warned that stock markets are tight, with valuations that historically portend low future returns.
At the same time, a wave of upcoming IPOs – like SpaceX and artificial intelligence companies like OpenAI and Anthropic – and a reduction in share buybacks could increase the supply of shares, putting additional pressure on prices.
“If you buy the S&P at this current valuation, the 10-year forward yields [are] negative,” he said. “It’s going to be very difficult to make money here.”
While he didn’t call the current environment a full-fledged bubble, he noted that the ratio of U.S. market capitalization to GDP remains near historical extremes, echoing levels seen before major downturns such as the dot-com bubble.
“In 1929 we were, I believe, at the peak, at 65% [stock market capitalization to GDP] then in 1987 we got to about 85 to 90%, in 2000 we got 270%,” he noted.
“And now we are at 252%, so you can imagine,” he said. “We are clearly very leveraged in stocks in this country.”
For this reason, a major correction in the stock market could have broader consequences for the economy, the government’s budget deficit and the bond market, according to Jones.
“10% of our tax revenues are capital gains. They drop to zero,” he said. “So you see the budget deficit explode. You see the bond market run away.”
You can see this kind of negative self-reinforcing effect,” he concluded. “It’s disturbing. »
