Hedging expert Jones predicts: Bitcoin will beat gold outright in fighting inflation, and stocks trading will be hard to make money from over the next 10 years.

Risk-hedging expert Paul Tudor Jones points out that Bitcoin, due to its fixed supply, has a superior anti-inflation capability compared to gold. He also warns that current U.S. stock valuations are excessively high, making profits over the next 10 years difficult, and a crash could trigger a severe economic domino effect.

American billionaire investor and hedge fund legend Paul Tudor Jones states that in an era of soaring prices, Bitcoin is the most powerful “anti-inflation weapon” on earth. He emphasizes that Bitcoin has an inherent advantage of “fixed supply,” thus outperforming gold in anti-inflation performance. He also warns that U.S. stock valuations are at extreme levels, and making money in the stock market over the next 10 years “may be very difficult.”

On Tuesday, Paul Tudor Jones said in the financial podcast “Invest Like the Best”: “Bitcoin is undoubtedly the best anti-inflation tool, even surpassing gold.”

He states that Bitcoin’s absolute advantage is its “supply cap,” unlike gold, which still has new mining output added annually, with a fixed supply limit of 21 million coins. Paul Tudor Jones believes that this innate, code-locked “absolute scarcity” is the key to Bitcoin’s success.

Looking back at past market cycles, Paul Tudor Jones further elaborates on Bitcoin’s appeal. He cites the stock market crash following the COVID-19 outbreak in March 2020, when central banks worldwide launched aggressive monetary and fiscal stimulus policies, flooding the market with liquidity, and “inflation hedging trades” rose:

When you see governments intervening heavily in markets and releasing liquidity en masse… you should clearly realize that “inflation trades” (buying assets that preserve or increase value during inflation) are about to take off.

He adds that in an environment of abundant capital, Bitcoin is undoubtedly the most attractive investment opportunity.

U.S. stock valuations near the limit, profits in the next 10 years may be hard to come by

However, compared to his optimism about Bitcoin, Paul Tudor Jones is quite worried about the current U.S. stock market. He warns that overall U.S. stock valuations are at historically high levels, often signaling weak future returns.

Additionally, a wave of major initial public offerings (IPOs) is imminent, including Elon Musk’s space exploration company SpaceX, as well as hot AI giants like OpenAI and Anthropic; coupled with a weakening of corporate buyback programs, these factors will significantly increase stock supply and put heavy pressure on stock prices. He states:

If you buy the S&P 500 at these extremely high valuation levels, the expected returns over the next 10 years are likely to be negative. Starting now, making money in the stock market will become very difficult.

Although Paul Tudor Jones does not explicitly declare that a “full-blown bubble” is already here, he highlights a key data point: the total market value of U.S. stocks as a percentage of GDP (commonly known as the “Buffett Indicator” in Taiwan’s financial circles) has approached extreme historical levels, comparable to levels before past market crashes. He explains:

Looking back to the eve of the Great Depression in 1929, U.S. stock market value as a percentage of GDP was 65%; during the 1987 crash, it was about 85% to 90%; and during the dot-com bubble in 2000, it skyrocketed to 270%.

Paul Tudor Jones says: “And today, we are at 252%, which you can imagine means the leverage in the stock market is already astonishing.”

Domino effect concerns: if the stock market crashes, bonds and fiscal stability will suffer

Paul Tudor Jones is most worried that a significant stock market correction could trigger a chain reaction, impacting the real economy, government budgets, and the bond market. He states:

Currently, the U.S. government derives up to 10% of its revenue from capital gains taxes. If the stock market crashes, this tax revenue will drop to zero. At that point, you will see the federal budget deficit spike sharply, and the bond market will also be bloodied. This creates a “negative self-reinforcing” vicious cycle, which is very concerning.

• This article is reprinted with permission from: “BlockCast”
• Original title: “Bitcoin’s Anti-Inflation Edge ‘Outperforms Gold’! Hedge Fund Legend: U.S. Stock Valuations Too High, Hard to Profit in Stocks Over Next 10 Years”
• Original author: Block Sister MEL