In a recent interview with CNBC’s Squawk Box, Paul Tudor Jones (PTJ) he reiterated their support for Bitcoin. In 2020, the legendary investor publicly revealed a bullish position on the cryptocurrency as a hedge against inflation and a digital version of gold.
Paul Tudor Jones commented on the current macroeconomic outlook and the problem of high inflation causing headwinds for the entire world. The US Federal Reserve (Fed) is trying to mitigate this problem by raising interest rates. So far, their methods seem ineffective.
In this regard, Paul Tudor Jones likened inflation to “toothpaste”, saying: “Once you take it out of the tube, it’s hard to put it back in.” Bitcoin, Ethereum and cryptocurrencies will continue to shine in this environment as the global economy faces a potential recession.
Paul Tudor Jones: The market changed, Bitcoin will create value
As the Fed tries to fight inflation and assets shrink as a result of high interest rates, Paul Tudor Jones discussed the different conditions for investors. Over the past few years, equities and risk assets have experienced an influx of capital at certain times of the year.
This allows financial assets to rise as people put their money into stocks, Bitcoin and other assets. In a high interest rate environment, investors will feel more inclined to stay in cash and avoid risk. This could limit the ability of financial assets to follow their usual cycle.
“It’s very difficult to take what we’ve learned investing over the last 12 years and leave it behind, but it has to be done. The market changes”, he says @ptj_official. “If 2-year rates are 4.3% or higher, you have to wonder if you’re getting the same flow of assets that you normally see.” pic.twitter.com/Bd0UU1HLuc
— Squawk Box (@SquawkCNBC) October 10, 2022
In this regard, the legendary investor spoke of the creation of a new normal as the Fed’s monetary policy is “unloaded”. The financial institution is trying to get the economy back on track, but PTJ questioned the Fed’s pace, saying it could be moving too fast.
These conditions, high inflation mixed with a Fed moving too quickly for the good of financial assets, could be beneficial for Bitcoin and crypto. In the coming decades, the Fed and other central banks could end their “monetary policy experiment,” PTJ said, leading to a period of less liquidity and economic austerity.
In the long run, these financial institutions will go from feeding inflation with more money to building confidence in the value of their currencies. Bitcoin will benefit from both situations, a time of more money and a period of “tax reduction”. Paul Tudor Jones said:
I have always had a small allocation of Bitcoin (…). Whoever is the president in 24 will have to deal with such a serious debt dynamic. We will have to have a tax cut. At a time when there is too much money, something like crypto, specifically Bitcoin and Ethereum, that will have value at some point.