Billionaire investor Paul Tudor Jones said that Bitcoin (BTC) is the strongest inflation hedge, noting that its fixed supply is a key advantage over traditional assets like gold.
Jones said, “Bitcoin is undoubtedly the best inflation hedge—better than gold.” Interview in the podcast “Invest Like the Best,” released on Tuesday, he pointed out that Bitcoin’s supply is limited. He noted that, unlike gold, whose supply increases annually, Bitcoin has a hard cap on its issuance, making it scarce by design.
Jones explains Bitcoin's appeal from the perspective of past market cycles. He notes that during periods of aggressive monetary and fiscal stimulus, such as after the stock market crash triggered by the pandemic in March 2020, inflation trades often emerge as central banks inject liquidity into the market.
“When you see all these interventions… you know the inflation trade is about to explode,” he said, adding that Bitcoin was the most attractive opportunity at the time.
His optimism toward Bitcoin contrasts sharply with his cautious stance on stocks. Jones warned that stock market valuations are elevated, and historically, current levels suggest weak future returns.
Meanwhile, a wave of upcoming initial public offerings (IPOs)—such as those from SpaceX, OpenAI, Anthropic, and other AI companies—along with reduced stock buybacks, could increase stock supply and exert additional downward pressure on share prices.
“If you buy the S&P 500 at current valuations, the expected return over the next 10 years is negative,” he said. “It’s really hard to make money from here.”
Although he did not directly label the current environment as a full-blown bubble, he noted that the U.S. stock market capitalization relative to GDP remains near historical extremes, echoing levels seen before major economic downturns such as the dot-com bubble.
“I think we peaked in 1929 at 65% of GDP for stock market capitalization, then reached 85%-90% in 1987, and 270% in 2000,” he noted.
“The leverage ratio has now reached 252%, you can imagine,” he said. “Clearly, the stock leverage ratio in our country is too high.”
Jones believes that, for this reason, a significant stock market correction could have broader implications for the economy, government budget deficits, and the bond market.
“Ten percent of our tax revenue comes from capital gains. Now that portion of revenue will drop to zero,” he said. “So you’ll see the budget deficit rise sharply. You’ll see the bond market take a severe hit.”
He concluded: "You can see this negative self-reinforcing effect. It's concerning."