Published: May 11th, 2020
Bitcoin has almost completely taken over the space that gold used to occupy as the safest hedge against inflation. While this sentence sounds more of a prospecting voice than a statement of fact, Paul Tudor Jones’s action of voicing his belief in the world’s first cryptocurrency serves to convert many souls. Also, it took Bitcoin back to $10,000.
For yet another time this year, Bitcoin surged past the $10,000 mark. However, the events of Friday, May 8 that brought Bitcoin to this price are not because of the collective efforts of the crypto market’s bulls; rather, the solo effort of Paul Tudor Jones.
What is surprising, however, is the sharp turnaround. Paul Tudor, like many of his peers in the hedge fund industry, believes that gold is the best cushion against inflation. The legendary hedge fund manager, however, seems to have changed his mind and is now flying the Bitcoin flag high.
You see, Paul Tudor is not just hedge fund’s most popular manager, the industry regards him as the best. His advice is, therefore, credible and sways action.
Bitcoin is now exchanging at $8,839.61 (Sunday, May 10, 8:30 UTC). It did briefly get to $10,000 in the early Friday, May 8 morning trading session. The ascension suggested, even if ever so momentarily, that the leading coin by market cap had regained all that the past three months had eroded.
The sudden rise follows a rollercoaster trend that the coin has assumed since February. Sometime in Mid-February, the world’s premier coin was exchanging in the $10,000 regions. Then, March came in and the effects of the coronavirus pandemic set in boldly.
Bitcoin lost more than $4,000 in less than two weeks. At this point, not many market analysts knew how things would turn. A good number of them, however, had mild belief in Bitcoin and even predicted that investors looking for alternative contracts would put their money in cryptocurrencies.
After a marked rise soon after, the place of Bitcoin was further strengthened by the actions of the central banks. The heavy stimulus packages that the Federal Reserve injected into the American economy, for instance, infused more than $2 trillion into the pockets of Americans. About a similar amount was approved by the European Union (EU) council of finance ministers for small businesses and the recently unemployed.
Because many investors consider fiat currencies and traditional money as dangerous assets during distress, Bitcoin became the safest means of securing wealth and fending off potential inflation.
On Thursday, May 7, the legendary hedge fund manager announced that he was aligning his financial arsenal to invest heavily in Bitcoin features. The news sent shockwaves into the cryptocurrency markets.
Jones is one of the trailblazing hedge fund managers to ever make a strong case for cryptocurrencies. The investment thesis he proposes delves into why Bitcoin may soon be the best hedge against inflation. The top investment fund manager believes that skyrocketing high inflation is most certainly going to result from all the increased money-printing ventures that central banks the world over are currently undertaking.
Bitcoin’s rise and the subsequent big fall in the weekend is partly due to this thesis by Jones. But it could also be due to his overt admission that he now owns Bitcoin. In a CNBC interview, the American investor who doubles as a philanthropist revealed that he had bought Bitcoin.
The announcement earned Jones public praise but also sparked an uptake of Bitcoin via a corresponding vibrant consumer purchasing. While describing traditional money as a wasting asset, Jones said that money will melt in the hands of its holders as a result of inflation.
Admitting that about 1% of his wealth holdings were in the form of Bitcoin, Jones reiterated that the growth of supply of traditional money is going to correspond with the troubles of debt monetization.
The sometimes controversial investor said that the world is already experiencing the Great Monetary inflation which he defined as the unprecedented increase of all forms of money. The quantitative easing done by central banks has brought in some $3.9 trillion, which is equivalent to 6.6% of the global GDP, Jones said.
He concluded by saying that such expansions have not been recorded anywhere in the world. Due to the arising situation, Jones advised that the best strategy to adopt is to own the fastest horse. If he is forced to bet on the said horse, he said his chips would fall on it if it is Bitcoin.
Some market analysts think that the jump that the markets experienced last week and the corresponding bullish nature of Bitcoin could be because of the anticipated Block Halving. The event that is set to occur just hours from now will introduce fresh cuts. The said compromises will not only affect the size of the reward that miners get for confirming blocks into the network but also the amount of new coin introduced to the blockchain at any one time.
The event will be the coin’s third halving. The second event which took place in 2016 was later followed by the monumental rise of Bitcoin that saw the price knock just beneath the $20,000 glass ceiling.
Bitcoin has had a series of gains this year. In mid-April, the cryptocurrency mostly hovered in the $6,500 and $7,000 region. It, however, has since seen impressive daily surges with the price recording ascensions of between $500 and $1,000 in a single day. It now is trading in the $8,600 and $9,400 region.
Bitcoin once again tested the magical $10,000-mark last week following bullish sentiments sent into the markets by legendary hedge fund manager Paul Tudor. Though the price of the cryptocurrency has undergone market corrections to dwell in the $8,600 and $9,400 region, the surge was a critical reminder of the importance of Bitcoin during moments of economic distress. The correction may also be short-lived with further jumps expected especially after the block reward haling set for mid-May. Whatever the direction the price takes in the next few weeks, market sentiments have already helped Bitcoin to ascertain its position as a safe-haven asset.