An experienced writer with practical experience in the fintech industry. When not writing, he spends his time reading, researching or teaching.
When hedge fund manager Paul Tudor Jones bought Bitcoin in 2021, he labeled it as a way to hedge his funds against inflation.
There are suggestions that the number of billionaires who invest in cryptocurrency increased in 2021 as more people seek to hedge against inflation. Many investors who were previously against Bitcoin and other cryptocurrencies as a store of value have now softened their stance.
Building a Hedge Against Inflation
According to a Bloomberg report, Thomas Peterffy, American founder and chairman of Interactive Brokers Group Inc. has opined that there is wisdom in diversifying into crypto assets.
His company began offering crypto assets in 2020 following an increase in demand for the same. Currently, the company offers Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Bitcoin Cash (BCH) but plans to expand its offering to include more coins this month.
Peterffy acknowledged the volatility associated with digital assets and the possibility of a swing in either direction. The man, who also has Bitcoin holdings, said:
“I think it can go to zero, and I think it can go to a million dollars. I have no idea”.
Likewise, Bridgewater Associates founder, Ray Dalio, revealed his crypto assets a few months after querying the assets as a store of value. Dalio described crypto-asset investments as “alternative money” in a world where the value of money is gradually depleting because of inflation.
In December, Dalio expressed his reasons for opting for digital assets. He stated:
“Cash, which most investors think is the safest investment is, I think, the worst investment.”
Also, when hedge fund manager Paul Tudor Jones bought Bitcoin in 2021, he labeled it as a way to hedge his funds against inflation.
Inflation due to Pandemic
Since the outbreak of the pandemic, nations have seen a downturn in their economic outlook. To buffer the effect on the citizens, many nations had to release stimulus packages from their cash reserves.
Consequently, there was inflation. In the United States, inflation is now at 6.8%. This has caused the Consumer Price Index (CPI) to rise even as the price of goods continues to rise.
Given the inflationary trends, the new direction by the billionaires shows that they are also seeing the ominous signs with fiat and are turning to crypto assets as a safe haven. We can expect to see many investors invest in cryptocurrencies.