The crypto community had not heard of Paul Tudor Jones before, but prices rose to $ 10,000, probably due to the latter’s statement on multi-billion dollar investment in Bitcoin (BTC).
A group of developers, financial professionals,Speculators and simply cryptocurrency supporters were welcomed by the fact that the illustrious macro-investor-billionaire announced that his fund would invest in bitcoins.
In a letter about market prospects called“Great monetary inflation,” Jones said his Tudor BVI fund could hold in bitcoins an amount equal to the “low percentage” of cryptocurrency futures.
The wide community, of course, joyfully shotthe news and sent the price of bitcoin above $ 10,000 during a wild night rally, and some leading crypto analysts have dubbed Mr. Jones’s entry into the Bitcoin club “a big event.”
Here are three reasons from Jones himself why he decided to invest in bitcoin.
Mr. Jones draws an analogy between bitcoins andgold in the mid-1970s. This was the period when the yellow metal first appeared on the futures market. The yellow metal had tripled its prices earlier in the bull market, but two years after the launch of the futures, it was corrected by more than 50%.
Bitcoin Price Chart Reminds Jones Chartgold. Cryptocurrency has grown exponentially in anticipation of the launch of the first futures on it in January 2018. But later it was adjusted to 80%.
Spot rate on gold after falling in 1977year has quadrupled over the next three years, surpassing its previous highs. Mr. Jones said the same thing is happening with Bitcoin now after it hit the bottom in December 2018. His move above $ 10,000 is part of a larger rally.
Haters just don't understand bitcoin
Mr. Jones saw the growing role of bitcoin inmacroeconomic space, especially in the face of the collapse of the financial market caused by Coronavirus. His views contradicted what legendary investor Warren Buffett said about cryptocurrency.
"Rat poison squared, - said in May 2018 the head of Berkshire Hathaway about the value of bitcoin, adding - Bitcoin has no use case. ”
Two years after these statements, Mr. FoundationBuffett reported a loss of $ 49.7 billion in the first quarter of 2020. The financial giant had to admit that he was mistaken in connection with his large investments in airlines, the sector that suffered the most from the pandemic.
Without mentioning anyone specifically, Mr. Jones notedthat investors should simply own the asset with the best performance, without focusing on the semantic component. Otherwise, they risk staying on the sidelines because they consider themselves smarter than the market.
“In the end, the best strategy for maximizing profits is to own the fastest horse.”- Jones said succinctly.
Not the best = has growth potential
Meanwhile, Mr. Jones was discussing the characteristicspreserving the value of bitcoin by comparing them with traditional assets. He noted that cryptocurrency has the lowest score in terms of purchasing power, reliability and liquidity.
At the same time, the investor praised Bitcoin for better mobility compared to financial assets, paper money and gold:
“Bitcoin had a rating below almost 60% offinancial assets, but its market capitalization is 1 / 1’200 of these assets. Bitcoin is valued at 62% of gold as a means of preserving value, but has a market capitalization of 1/60 of the outstanding value of gold. Something is wrong here, and I think this is the price of bitcoin. ”
However, Jones said market capitalizationBitcoin could skyrocket after launching Libra from Facebook or the digital renminbi. This will bring bitcoin into the consciousness of more people, which ultimately will lead to an increase in the purchasing power and reliability of the cryptocurrency.
It should be noted separately that Tudor BVI managesassets of almost $ 22 billion and investing just a few percent of the fund’s funds in bitcoin can raise the price by hundreds of dollars, and, more importantly, open the way for other numerous players of this scale to the market.