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 such as gold.
“Bitcoin is unequivocally the best inflation hedge out there, more so than gold,” Jones said in an interview with the Invest Like the Best podcast published Tuesday. He pointed out the limited 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 scarcer by design, he said.
Jones framed bitcoin’s appeal through the lens of past market cycles. During periods of aggressive monetary and fiscal stimulus, such as after the March 2020 pandemic crisis, he said inflation trades tend to emerge as central banks inject liquidity into the system.
“When you saw all the interventions… you knew inflationary trading was going to take off,” he said, adding that bitcoin was the most attractive opportunity at the time.
His bullish view on bitcoin contrasts with a more cautious stance on stocks. Jones warned that stock markets are under pressure, with valuations historically pointing to weak future returns.
At the same time, a wave of upcoming initial public offerings (such as SpaceX and artificial intelligence companies such as 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 term returns [are] negative,” he said. “It’s going to be very difficult 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 near historical extremes, echoing levels seen before major crises like the dot-com bubble.
“In 1929 we were, I think, at the top, with 65% [stock market capitalization to GDP] and then in 1987 we reached around 85%-90%, in 2000 we reached 270%,” he noted.
“And now we’re at 252%, so you can imagine,” he said. “We are clearly very leveraged in the equities of this country.”
That’s why a major stock market correction can have broader ramifications on the economy, the government’s budget deficit and the bond market, according to Jones.
“10% of our tax revenue is capital gains. It goes to zero,” he said. “So you can see the budget deficit exploding. You can see the bond market being smoked.”
“You can see this kind of self-reinforcing negative effect,” he concluded. “It’s worrying.”
