Billionaire investor Paul Tudor Jones says Bitcoin Gold is the strongest hedge against inflation, and its fixed supply is a key advantage over traditional assets such as gold.
“Bitcoin is hands down the best inflation hedge, better than gold,” Jones said in an interview on the Invest Like the Best podcast released on Tuesday, pointing to the largest cryptocurrency’s supply cap. He said that unlike gold, whose supply increases every year, Bitcoin has strict limits on the number of coins that can be created, making it more scarce by design.
Jones looked at past market cycles to illustrate Bitcoin’s appeal. He said that during periods of aggressive monetary and fiscal stimulus, such as after the March 2020 pandemic collapse, inflation trades tend to emerge as central banks inject liquidity into the system.
“When you see all the interventions… you know the inflation trade is about 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 stocks are already stretched, with historical valuations pointing to weak future returns.
At the same time, an upcoming wave of initial public offerings (such as SpaceX and artificial intelligence companies such as OpenAI and Anthropic) and a reduction in share buybacks may increase the supply of shares, putting additional pressure on prices.
“If you buy the S&P at current valuations, the 10-year forward return [are] Negative,” he said. “It’s really hard to make money from here. “
While he stopped short of calling the current environment a full-blown bubble, he noted that the ratio of U.S. stock market capitalization to GDP remains close to historically extreme levels, echoing levels seen before major recessions such as the dot-com bubble.
“I think in 1929 we were in the lead, at 65% [stock market capitalization to GDP] Then in ’87 we got to about 85%-90%, and in 2000 we got to 270%,” he noted.
“Now we’re at 252%, so you can imagine,” he said. “The stock market leverage in our country is obviously so high.”
Because of this, a major correction in the stock market could have broader implications for the economy, government budget deficits and bond markets, Jones said.
“Ten percent of our tax revenue is capital gains. They go to zero,” he said. “So you can see the budget deficit explode. You can see the bond market get smoky.”
You can see this negative self-reinforcing effect,” he concluded. “It’s disturbing. “
