Why billionaire Paul Tudor Jones sees Bitcoin as an undervalued asset
American billionaire Paul Tudor Jones announced in May this year that he was investing in Bitcoin to hedge inflation. Few expected back then that Jones’ gesture would open up a new asset for a number of institutional investors who have since become bolder in adding cryptocurrency to their reserves, guided by the same premises as Jones. The billionaire himself now calls Bitcoin an undervalued asset.
“$ 500 billion is the wrong market capitalization for bitcoin in a world where there is a $ 90 trillion stock market, and God knows how many trillions there are in fiat currency. I assume it is being misjudged in terms of its inherent capabilities, ”he told Yahoo! Finance on Thursday.
Cryptocurrency and Stock Market Capitalization Image: Visualcapitalist
Today Jones is one of the most recognized traders in the world. He rose to fame in the 1980s when he predicted a Black Monday market crash in 1987. It is also associated with the rapid development of the global hedge fund industry. Tudor Investment Corporation manages $ 10 billion in assets, and the investor’s personal fortune is estimated at $ 5 billion..
Jones refuses to call himself a cryptocurrency expert despite the fact that he chose the right moment to buy bitcoin this year. Since his investment, the rate has risen 120% from less than $ 9,000 to all-time highs of around $ 20,000..
“Cryptocurrencies will have a crazy rocket flight with ups and downs along the way,” he says. – Bitcoin, in particular, in 20 years will be significantly higher than the point where it is now. From here the road for him lies to the north “.
The billionaire is sure that in today’s realities, few people can objectively assess bitcoin. He compares the modern cryptocurrency market to the stocks of IT companies in 1999: “Because the Internet was just developing, no one knew how to evaluate it. A whole world of possibilities lay ahead. What we know for sure is that maybe in 20 years our children and grandchildren will use some form of digital currency. “.
Jones expects that cash will gradually go out of circulation, and will be replaced by national digital currencies. He admits that he does not know what place in this world will be prepared for Bitcoin and other cryptocurrencies, citing Ethereum and Tether as examples..
During the interview, the investor also drew a parallel between the cryptocurrency market and the precious metals market. Bitcoin, he said, is capable of becoming a “noble cryptocurrency.” In this he will be promoted by “historical integrity” as a pioneer and limited supply. In a separate category, he singled out transactional cryptocurrencies, the functions of which in the old days were performed by copper and lead..
In the footsteps of Paul Tudor Jones
In May, Jones reported that he had “conservatively” placed 1-2% of his assets in bitcoin. In general, there are more and more opinions among investors that such an allocation of bitcoin in a portfolio is correct..
After the announcement of such an influential figure in the space of traditional finance, a number of companies decided to open Bitcoin for themselves. Several multibillion-dollar funds have notified regulators that they can join the cryptocurrency market through Grayscale’s futures or bitcoin trust. The most illustrative example to date is MicroStrategy inc., Which invested $ 425 million in bitcoin in August-September this year.Since then, the value of the cryptocurrency it bought has grown to $ 750 million..
At the same time, the flow of new people who want to hedge risks with Bitcoin does not dry up. As the dynamics of the markets show, such insurance pays for itself against the backdrop of ongoing events in the world associated with the coronavirus pandemic and the measures of economic stimulus taken by the authorities..
Bitcoin Charts, S&P 500 and gold YTD
The last to emerge from the shadows was the company of former fund manager Raul Pal’s Real Vision, which invested 10% of its cash reserves in bitcoin about three months ago. “We think this is a good way to store a surplus of cash,” Pal told Decrypt. – It’s only 10%. What is the most negative scenario? It will drop 50% and we will lose 5% of our reserves. We work on a subscription basis, we create cash flows, so everything will be fine with us. But if it grows 10 times, the difference will be noticeable “.
Pal explained why many companies are reluctant to invest in bitcoin. This is due to the fact that the reserve manager, who usually reports to the CFO, must justify the decision to purchase the cryptocurrency, and for this he will have to convince the shareholders.
“He needs a paper from an investment bank or someone in authority who can say that this is a really good diversification asset that will increase the overall value of the portfolio. When such studies start to appear, and they begin, everything will change. The annoying cyber flies will not convince the pension fund to invest in bitcoin, ”he added..
Pal himself believes that the $ 1 million mark is achievable within 5-6 years, and next year sees bitcoin between $ 150,000 and $ 300,000. In support of his position, Pal recently announced the sale of his remaining gold and the investment of the proceeds funds in Bitcoin and Ethereum.
“I don’t have anything else (except for some dollars and bonds). 98% of my liquid capital, – the investor admitted. – I have not stopped believing in gold, but I think that bitcoin will grow much stronger “.
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