Paul Tudor Jones makes compelling case for Bitcoin

Wall St. legend Paul Tudor Jones has made a compelling case for owning Bitcoin as a hedge against central bank money printing.

“I am not a hard-money nor a crypto nut,” said the founder of hedge fund Tudor Investment Corp in his May communication to investors, published on Thursday. But, he added, “At the end of the day, the best profit-maximizing strategy is to own the fastest horse… If I am forced to forecast, my bet is it will be Bitcoin.”

Jones, widely lauded as one of the greatest hedge fund managers ever, used a substantial portion—as much as 40%—of his letter making a case for why institutional investment is wise to consider Bitcoin. 

“I am not an advocate of Bitcoin ownership in isolation, but do recognize its potential in a period when we have the most unorthodox economic policies in modern history,” he said. 

Bitcoin: an investable asset

He told clients Bitcoin reminded him of gold in the 1970s, and that the “Great Monetary Inflation,” an expansion in every form of money, led him to revisit Bitcoin as an investable asset for the first time in two and a half years. 

He said he had been “left speechless” at the amount of money printed since February, and highlighted the future difficulties the Federal Reserve would face in increasing interest rates to absorb such “an unprecedented expansion of every form of money unlike anything the developed world has ever seen.”

Bitcoin, he said “falls into the category of a store of value and it has the added bonus of being semi- transactional in nature.”

He pointed out that Bitcoin is “literally the only large tradeable asset in the world that has a known fixed maximum supply.”

Comparing Bitcoin with gold, he argued that Bitcoin could even be undervalued.

He added that the likely introduction of Facebook’s Libra and China’s DCEP, “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.”

“The most compelling argument for owning Bitcoin is the coming digitization of currency everywhere, accelerated by Covid-19,” said Jones.

Wall St. is coming

Jones now becomes one of the first big hedge fund managers to support Bitcoin—and it’s likely that he won’t be the last. 

“One of the smartest and most successful investors of the last quarter century is now long Bitcoin. Wall Street is coming…,” tweeted Gemini co-founder, Tyler Winklevoss on the news. 

“Once the leader is in, no one will feel ‘stupid’ piling in to the trade,”  said Ryan Selkis, founder of crypto data provider Messari.

Notably, Jones did not say he was investing in Bitcoin itself, but instead speculating on the future price of Bitcoin. The letter also disclosed that the fund’s initial exposure to Bitcoin will be set at “low single digits.”

Futures trading is Jones’ forte and where he got his start, and it’s possible that buying Bitcoin would be outside his fund’s mandate, Matthew Graham, chief executive of Beijing-based blockchain investment firm Sino Global Capital pointed out.

He highlighted, too, that Jones has form, having famously nailed the 1987 crash, and “played it perfectly, tripling the fund’s money through an enormous short position.”

So he won’t be too surprised by Bitcoin’s wild volatility.