Billionaire hedge fund manager Paul Tudor Jones believes Bitcoin (BTC) will face strong headwinds over the coming months due to regulators and inflation.
Jones made the remarks during his last appearance on CNBC’s Squawk Box, where he discussed various economic themes and monetary policy.
Jones said he still believes in Bitcoin and continues to allocate a small percentage of his wealth to the asset. He said:
“It’s the one thing that people can’t adjust the supply, so I’m sticking with it and I’ll always stick with it.”
Bitcoin has a real problem
Jones said he liked Bitcoin more in December 2022 and still likes it, but is cautious about its future.
He said that Bitcoin and gold have been doing very well lately due to high risk premiums in the environment of high inflation. However, if inflation has “done its part”, the benefits of inflation hedges may be over, and this could make Bitcoin “boring”.
He explained that Bitcoin has a “real problem” in the US and may not be as popular in the coming months compared to recent years due to the negative regulatory attitude towards crypto coupled with lower inflation.
Jones said:
“In the United States, you have the whole regulatory apparatus against it [Bitcoin]so it’s just a little news from yesterday.
Furthermore, if inflation comes back under control and investors no longer hedge against it, it will likely lead to a fall in gold and Bitcoin – both of which are considered good hedge assets.
Impact of AI
Jones said the arrival of AI flipped the script on an inflationary future, and the Federal Reserve is now more likely to get it under control.
According to Jones, this will be driven in part by the productivity gains generated by AI, as well as new innovations in the industry.
He said:
“Before AI, before the potential productivity boost we get from it, I would have outlined a very different story in terms of inflationary futures and inflation hedging.”
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