JP Morgan Backs PT Jones: Bitcoin Better Than Gold For Inflation
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JP Morgan Backs PT Jones: Bitcoin Better Than Gold For Inflation

Paul Tudor Jones says Bitcoin is a better hedge against inflation than gold: JP Morgan analysts are in agreement.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

Paul Tudor Jones, the American billionaire hedge fund manager, has told CNBC that Bitcoin is winning the race against gold. After discussing how the inflation we’re seeing is not transitory, Jones added that crypto is his preferred hedge against inflation. 

Why is Bitcoin Better Than Gold?

In an interview on Wednesday with CNBC, Paul Tudor Jones said he regards crypto as a better hedge against inflation than gold right now. He said:

“It would be my preferred one over gold at the moment. Clearly, there’s a place for crypto. Clearly, it’s winning the race against gold at the moment.”

Jones also voiced concern regarding inflation, saying it is the number one issue for investors now. He criticized the Federal Reserve’s way of dealing with inflation, saying this is “the most inappropriate monetary policy that I’ve seen maybe in my lifetime”.

Jones insisted that inflation is not transitory and poses a major threat to the US financial markets and the recovering Covid-hit economy. “It’s probably the single biggest threat to certainly financial markets and probably I think to society just in general,” he said.

Back in June, Jones told CNBC that Bitcoin is a good portfolio diversifier, and suggested that investors need to have 5% of their portfolio in Bitcoin. “The only thing I know for certain, I want 5% in gold, 5% in bitcoin, 5% in cash, 5% in commodities,” he said at the time. 

Now, Jones admits that he holds some crypto in his portfolio. “I’ve got crypto single digits in my portfolio,” he said, hinting at the percentage of his holdings in cryptocurrencies.

Over the past 12 months, Bitcoin has gained more than 430% while gold has lost 8%. Earlier today, Bitcoin price set a new all-time high at around $67,000 following a harsh summer that saw the price of flagship cryptocurrency plunge by over 50%.

Image courtesy of JP Morgan.

Earlier this month, JPMorgan also noted that institutional investors are buying Bitcoin rather than gold to hedge against inflation. A note shared by JPMorgan stated:

“The re-emergence of inflation concerns among investors has renewed interest in the usage of Bitcoin as an inflation hedge. Institutional investors appear to be returning to Bitcoin perhaps seeing it as a better inflation hedge than gold.”

Meanwhile, historic data reveals that Bitcoin has outperformed both gold and the S&P 500 by a wide margin:

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JP Morgan: Inflation Is Driving Bitcoin’s Rally

Strategists at JPMorgan say inflation concern is driving Bitcoin’s rally, not excitement around US Bitcoin futures ETF. They argue the launch of BITO, ProShares Bitcoin Strategy ETF, is unlikely to prompt a new phase of cash flow towards Bitcoin. They said:

“Instead, we believe the perception of Bitcoin as a better inflation hedge than gold is the main reason for the current upswing, triggering a shift away from gold ETFs into Bitcoin funds since September.”

Strategists believe gold has failed to act as a strong hedge against inflation, citing how the $56 billion SPDR Gold Shares ETF is likely to see its fourth consecutive month of outflows. On the other hand, the Bitcoin futures ETF saw a record $1 billion in volume on its opening day, with its price increasing by more than 4.7%.

Moreover, a report by CoinShares found that crypto products are continuing to see inflows. For the week ending October 15, digital asset investment products saw inflows totaling $80 million, which pushed total assets under management (AUM) to $72.3 billion, their highest level on record. Bitcoin saw the largest inflow, raking in a $70 million inflow.

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Do you agree with Paul Tudor Jones in that Bitcoin is a better hedge against inflation than gold? Let us know what you think in the comments below.