Paul Tudor Jones. Billionaire, hedge fund manager, and now a public Bitcoin advocate.
If you haven’t been keeping up with the news, Paul Tudor Jones yesterday became one of the first big hedge fund managers to publicly get into Bitcoin.
He wrote investors a memo to explain why he is investing multiple percentages of his client’s money in Bitcoin.
It’s a 10 page paper, and in it there are a handful of gems summarizing the importance of Bitcoin in an economic environment like we have today. Twitter user Alok Vasudev made a great tweet-storm highlighting Paul’s most important quotes, which I’ve expanded on below.
Bitcoin’s scarcity premium
Paul says “On Bitcoin’s scarcity, it is literally the only large, tradeable asset in the world that has a known, fixed, maximum supply.”
This is a big deal, because in today’s world, we don’t have many hard money choices. The world is built on the back of soft money that takes money from the savers and distributes it to the spenders.
And while central banks are printing more money, it decreases the incentive for savers to save, and for workers to work. This is especially concerning as the number of voting-age Americans who work is outnumbered by the number of voting-age Americans who don’t work for the first time ever.
If you think about the reasons that people work and save money, it’s because they want to be able to use that value in the future. But in a world where the value of savings and earnings are being shrunk faster than ever by central bank printing, there’s an incentive for hard-working, well-meaning Americans to exit the system.
Paul says “Bitcoin is the only financial asset that actually trades 24/7 in the entire world”
Liquidity is hugely important for the success of Bitcoin, and it’s something that Bitcoin has more of than any other crypto-asset. Whether you’re trading from Yen, Euros, Dollars, or any other fiat currency, the exchange market for Bitcoin is always far more liquid than exchange markets for assets like Ethereum or other coins.
This means people can get in and out of Bitcoin at competitive exchange rates in a matter of minutes, even on weekends and evenings.
Coronavirus accelerating Bitcoin and crypto
Paul says “The most compelling reason for owning Bitcoin is the coming digitization of currency everywhere, accelerated by the Coronavirus”
The Coronavirus shutdowns led to an enormous number of people receiving stimulus package cheques. And the reality is that in many parts of the world, these are distributed as paper cheques, a terrible way to transfer money to those who need it immediately. Bitcoin is a massive improvement to the flow of money that most banks can’t yet match.
Bitcoin as a macro-hedge
Paul says “Owning Bitcoin is a great way to defend oneself against the Great Monetary Inflation, given the current fact-set”
Countries all over the world are printing money faster than ever before. We’ve already seen currencies like the one in Lebanon lose upwards of 60% of it’s value, which is basically hyperinflation at this point. The Brazilian Real is also in jeopardy of failing.
To avoid these kinds of systemic currency failures, people and governments may begin to hedge their exposure by owning some Bitcoin. Why Bitcoin? Because especially for people that need to escape government controls, Bitcoin is portable across borders.