When hedge fund manager Paul Tudor Jones bought Bitcoin in 2021, he labeled it a way to protect his funds against inflation.
There are suggestions that the number of billionaires investing in cryptocurrency increased in 2021 as more people seek to protect themselves against inflation. Many investors who previously were against Bitcoin and other cryptocurrencies as a store of value have now softened their stance.
Building an Inflation Protection
According to a Bloomberg report, Thomas Peterffy, American founder and president of Interactive Brokers Group Inc, opined that there is wisdom in diversifying into cryptoactives.
His company began offering cryptoactives in 2020 after an increase in demand for them. The company currently offers Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and Bitcoin Cash (BCH), but plans to expand its offering to include more currencies this month.
Peterffy recognized the volatility associated with digital assets and the possibility of a swing in any direction. The man, who also has stakes in Bitcoin, said:
“I think it could go down to zero and a million dollars. I have no idea”.
Likewise, Bridgewater Associates founder Ray Dalio revealed his crypto-assets a few months after consulting the assets as a store of value. Dalio described investments in cryptoactives 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:
“Money, 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 this as a way to protect his funds against inflation.
Inflation due to pandemic
Since the outbreak of the pandemic, nations have seen a slowdown in their economic prospects. To dampen the effect on citizens, many nations have had to release stimulus packages from their cash reserves.
Consequently, there was inflation. In the United States, inflation is at 6.8%. This caused the Consumer Price Index (CPI) to rise, even with the increase in the price of goods.
Given inflationary trends, the billionaires’ new direction shows they are also seeing the ominous signs with fiat and are turning to crypto-actives as a safe haven. We can expect to see many investors investing in cryptocurrencies.