Crypto investors should be aware of the importance of macro-economics and adoption. Recently, the Fed raised inflation expectations sharply. It says inflation is transitory and probably will not raise rates until 2023.
At the same time, famous investor Paul Tudor Jones suggest a 5% bitcoin allocation. He told CNBC: “I like bitcoin as a portfolio diversifier. Everybody asks me what should I do with my bitcoin. The only thing I know for certain, I want 5% in gold, 5% in bitcoin, 5% in cash, 5% in commodities… For me, it’s just a way of kind of foundationally looking at how do I protect my wealth. Over time it’s a great diversifier. Again, I look at bitcoin as a story of wealth.” Paul Tudor Jones is not alone. Investing legends like Stanley Druckenmiller, Bill Miller and Ray Dalio have also gotten behind bitcoin.
We are still in the very early stages of institutional crypto adoption but that these widely respected investors believe bitcoin is a valuable portfolio diversifier and hedge, paves the way for more to follow.
If inflation raises its ugly head but yields on bonds and stocks stay artificially low, expect a run into alternative stores of value such as precious metals and cryptos. There are around $45T worth of bonds in the U.S. alone. If even a fraction of this capital flows into crypto currencies, you know what to expect!
Sven Franssen