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 like 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 to the largest crypto’s limited supply. Unlike gold, whose supply increases every year, bitcoin has a hard limit on the number of coins that can be created, making it more scarce 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, he said inflation trades tend to emerge as central banks inject liquidity into the system.
“When you saw all the interventions … you just knew the inflation trade was going to pick up,” he said, adding that bitcoin was the most compelling option at the time.
His bullish view on bitcoin contrasts with a more cautious stance on stocks. Jones warned that equity markets are stretched, with valuations historically pointing to weak future returns.
At the same time, a wave of upcoming IPOs – such as SpaceX and artificial intelligence companies such as OpenAI and Anthropic – and reduced share buybacks could increase stock supply and put further pressure on prices.
“If you buy the S&P at this current valuation, the 10-year forward returns [are] negative,” he said. “It’s going to be 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 US stock market capitalization to GDP remains near historic extremes, echoing levels seen before major downturns such as the dotcom bubble.
“In 1929 we were, I think at the peak, at 65% [stock market capitalization to GDP] and then in ’87 we got to about 85%-90%, in 2000 we got 270%,” he noted.
“And now we’re at 252%, so you can just imagine,” he said. “We are clearly so leveraged in equities in this country.”
Because of that, a major stock market correction could have broader implications for the economy, the government budget deficit and the bond market, according to Jones.
“10% of our tax revenue is capital gains. They go to zero,” he said. “So you can see the budget deficit blowing up. You can see the bond market being smoked.”
You can see this kind of negative self-reinforcing effect,” he concluded. “It’s worrying.”
