The billionaire hedge fund manager, Paul Tudor Jones, known for his early adoption of Bitcoin, has shared his skepticism about increasing his investment in the cryptocurrency amidst unpredictable macroeconomic shifts.
During the pandemic, Jones purchased Bitcoin for around $8,000 per unit and has retained it since as a “small diversification” of his portfolio. He commends Bitcoin’s unalterable supply and its ability to act as a safeguard against inflation.
During his interview with CNBC, Tudor Jones said,
It’s the only thing that humans can’t adjust the supply in, so I’m sticking with it. I’m going to always stick with it as just a small diversification of my portfolio, he said in an interview with CNBC.
However, he admitted to being unsure about buying more Bitcoin given the current circumstances. This is because he sees some potential challenges that could hinder its growth in the future.
Regulatory Threats, Falling Inflation, And AI Developments
Jones pointed out three factors that could affect Bitcoin’s appeal as an investment: regulatory threats, falling inflation, and AI developments.
He said that the ongoing U.S. regulatory crackdown on the crypto sector could pose a risk for Bitcoin and other digital assets. He cited the recent proposal by the Democratic Party to impose stricter reporting requirements and taxation on crypto transactions.
Tudor Jones observed that the buying sentiment for Bitcoin was partly driven by inflation concerns, which may now be easing off. He pointed out a decline in the annual U.S. Consumer Price Index (CPI) since June 2022, reaching 4% by May 2023.
He added that the rise of AI and its possible impact on productivity could also change the macroeconomic landscape and reduce the need for inflation hedges. Jones added,
If inflation is truly done a bit, if that story’s been played, then you have to wonder: we were buying gold and bitcoin for the inflation hedges—that game may be over
Bitcoin’s Price Performance
Bitcoin’s value has surged tremendously since Jones first bought it in 2020, hitting an annual high of $31,500 on June 23, 2023. Experts attribute this monumental rally to the rising institutional interest and widespread adoption of cryptocurrency.
However, Bitcoin has encountered both success and obstacles in its development. Despite its potential for growth, the cryptocurrency faces challenges from regulators due to concerns over environmental effects, security risks, and illicit use cases.
Related Reading | Fed Chair Says Crypto Has “Staying Power” As An Asset
Bitcoin gained 17.19% but lost 13.66% in the last month. Unfortunately for investors, its all-time high remains out-of-reach after reaching a peak of $68,906.48 in November 2021.