As Bitcoin Halves It Is Now Emerging As A Horse To Bet On For Fund Managers
We have arrived on the day of Bitcoin halving. The cryptocurrency has been in the buzz due to “the halving”, scheduled for May 12. After the halving, Bitcoin miners would be rewarded 6.25 coins every 10 minutes, instead of the present 12.5 coins. Just like in the past when Bitcoin halving was due, the currency gained traction and momentum in the media but this halving has come at a time like no other.
Bitcoin As A Hedge Against Inflation
The world is in the grips of a global pandemic, which has upended lives, pushed millions into unemployment, and jittered governments globally. Central banks have been pumping up the money supply to try to contain the misery the disease has inflicted upon billions. While there are growing fears over the erosion of the underlying value of fiat currencies, Bitcoin is on the opposite course. Halving would cut the supply of Bitcoin in half and thus increase its scarcity.
Billionaire investor Paul Tudor Jones is betting on Bitcoin as a hedge against inflation, which will result from central bank stimulus largesse. Likening the role of Bitcoin to that gold played in the 1970s, the Tudor Investment Corp, CEO wrote in a market note, “The best profit-maximizing strategy is to own the fastest horse.” The note titled, “The Great Monetary Inflation” disclosed Jones’ Tudor BVI fund may hold a low single-digit percentage of assets in Bitcoin futures.
Jones said that he embraced Bitcoin after considering the implications of large fiscal spending and bond purchases by central banks, which are trying to mitigate the economic effects of the pandemic. He reckons $3.9 trillion of money or 6.6% of global economic output has been printed by central banks since February.
Why A Hedge Fund Manager Loves Crypto?
“If I am forced to forecast, my bet is it will be Bitcoin,” said Jones recommending the cryptocurrency as a hedge against the coming inflation. He cautioned, “We are witnessing the Great Monetary Inflation — an unprecedented expansion of every form of money, unlike anything the developed world has ever seen.”
Jones has nearly 2% of his assets in Bitcoin but every day that Bitcoin survives, “the trust in it will go up.” If Bitcoin is good enough for one of the best macroeconomic traders, then it certainly should be many others.
Last year in June Jones had favored gold saying, if the commodity hit 1,400 levels it would reach 1,700 quickly. Gold futures for June delivery were trading at $1,729.60 an ounce on Comex when this article was written, gaining 12.90% Year to date and 31.12% in the last 12 months. Jones would be placing his Bitcoin bets on the futures market on CME Group Inc. Bitcoin futures on that exchange have touched a high of $10,155. The most active Bitcoin contract having risen 38% year to date and 70% over the past 12 months.
How To Bet On The Darkhorse?
Meanwhile, the Dow Jones Industrial Average fell 16.34% year to date and 7.56% in the past one year, while the S&P500 index declined 10.82% year to date and rose a mere 0.36% in the past 12 months. Now that Bitcoin sometimes touted as digital gold has outperformed both physical gold and the bourses, the choice becomes apparent. It may make sense for more traditional fund managers to look into cryptocurrencies and follow the lead of Jones because sometimes it is the dark horse that wins the race.
The easiest way to place your bets is through Oobit Direct, which makes purchasing Bitcoin really simple. All you need is a credit or debit card and about two minutes. Creating your Oobit account takes just a few clicks and you can purchase Bitcoin up to $50,000. The icing on the cake? Once you complete your KYC on Oobit, you can also trade the coins you purchase on multiple exchanges using Oobit Pass.
