Billionaire Paul Tudor Jones buys Bitcoin as a hedge against inflation
Paul Tudor Jones, the billionaire founder of hedge fund Tudor Investment Corporation and prominent macro investor has told investors that he sees Bitcoin as a hedge against the inflation caused by central bank quantitative easing strategies.
“The best profit-maximising strategy is to own the fastest horse,” Jones wrote in a market outlook paper titled ‘The Great Monetary Inflation’. He continued, “If I am forced to forecast, my bet is it will be Bitcoin.”
Jones reported that his Tudor BVI fund may hold as much as a low single-digit percentage of its assets in Bitcoin futures and has become one of the first hedge fund managers to embrace the digital currency, Many of his counterparts have shrugged it off as a passing fad. He explained that he was motivated to take a hard look at Bitcoin after considering the implications of fiscal spending and bond-buying by central banks.
According to his calculations, $3.9 trillion in cash, which equates to 6.6% of global economic output, has been printed since February this year. “It has happened globally with such speed that even a market veteran like myself was left speechless,” Jones wrote. “We are witnessing the Great Monetary Inflation -- an unprecedented expansion of every form of money unlike anything the developed world has ever seen.”
When looking at various hedges like gold, Treasuries, certain stocks, currencies and commodities, he recognised that there is a “growing role for Bitcoin”. The news comes as the Bitcoin price rallied above $10,000 on 7 May, doubling from its recent low in mid-March.
Jones reportedly dabbled in Bitcoin for the first time in 2017, doubling his money before exiting close to the cryptocurrency’s peak at almost $20,000. Now, he said he evaluated Bitcoin as a store of value and decided it passes the test based on four characteristics: purchasing power, trustworthiness, liquidity, and portability.
“I am not a hard-money nor a crypto nut,” he wrote. “The most compelling argument for owning Bitcoin is the coming digitidation of currency everywhere, accelerated by Covid-19.”
He predicts the post-pandemic recovery will be vastly different from what happened after 2008’s financial crisis, in part because bank balance sheets are stronger and the Fed is effectively permitting them to lend more aggressively. He doubts the Fed can prevent the prices of goods and services from rising in the long term as they’ve been able to now in the short term. He asked, “How reasonable is it to expect that in the recovery phase the Fed will be able to deliver an increase in interest rates of a magnitude sufficient to suck back the money it so easily printed during the downswing?”
“Bitcoin reminds me of gold when I first got into the business in 1976,” he wrote. He also said he remains a fan of gold and predicted it could rally to $2,400 and possibly to $6,700 “if we went back to the 1980 extremes”.
Bitcoin soars past $10k for first time since February
Bitcoin surged nearly 7% in 24 hours to $10,071 just before midnight on 7 May. After dropping to $3,600 per BTC on 12 March, otherwise known as “Black Thursday”, the price has since gained over 177%.
Notably, there is no asset (aside from a few other cryptocurrencies), stock, commodity or precious metal that has experienced as sizable a gain as BTC’s recent run. The price gives Bitcoin a $184 billion market valuation. Excitingly, the rally indicates that investors who bought BTC at the beginning of the year would now be up almost 40% on their investment.
Following the economic fallout from COVID-19 affecting almost all traditional and alternative financial markets, the rise comes after a massive crypto market sell-off in March. What’s more, increased buzz owed to the impending halving event set to take place sometime in mid-May has brought Bitcoin firmly back into the spotlight.
Libra Association appoints HSBC Chief Legal Officer as CEO
Former Chief Legal Officer at HSBC, Stuart Levey, has been appointed as the Libra Association’s new Chief Executive Officer. The decision was announced in a Wednesday press statement and comes less than a month after the Libra Association announced a bold revision of its stablecoin initiative.
The project now looks to issue multiple, fiat currency-tied stablecoins, and shows an intention of wanting to align itself more closely with central banks around the globe interested in creating central bank digital currencies (CBDCs).
The association noted in a statement that “With the recent initiation of a payment system license under the regulatory supervision of Switzerland’s Financial Markets Supervisory Authority, FINMA, Mr. Levey’s leadership will help ensure our vision for innovation, inclusion, compliance and competition can be realized”.
Levey’s LinkedIn profile showcases some notable experience aside from HSBC, including serving as the Under Secretary for Terrorism and Financial Intelligence for the US Treasury Department for seven years. He also previously worked for the US Department of Justice.
In a statement about the move, Levey said, "I am honored to join the Libra Association as it charts a bold path forward to harness the power of technology to transform the global payments landscape". He continued, "Technology provides us with the opportunity to make it easier for individuals and businesses to send and receive money, and to empower more than a billion people who have been left on the sidelines of the financial system, all with robust controls to detect and deter illicit financial activity. I look forward to working closely with governments, regulators, and all of our stakeholders to realize this vision”.
Ukraine’s nuclear power plants could begin mining crypto
In an unprecedented move, nuclear plants in Ukraine could start mining Bitcoin and other cryptocurrencies pending the approval of a government proposal.
Ukraine’s acting energy minister, Olha Buslavets, sent a letter to Energoatom, the country’s state-owned operator of nuclear power plants, to consider using excess electricity to mine cryptocurrencies.
A letter published by a Member of Parliament, Geo Leros, said: “To work out, together with Energoatom and the Energoatom Trading division, the regulatory and technical issues of the possible implementation of cryptocurrency mining projects in order to provide additional markets for the electricity generated by nuclear power plants”. According to the letter, Energoatom has until 8 May to explore potential ways to mine cryptocurrencies.
In a separate post published on the Ukraine energy ministry’s Facebook account reported that nuclear power plants in the country have amassed excess electricity due to the effects of the COVID-19 lockdown.
The ministry explained that President Volodymyr Zelensky’s vision is to digitise Ukraine and that applying innovative and perhaps unconventional solutions to utilise excess electricity is a smart way forward.
According to the ministry, “One of the modern approaches for using excess electricity is to devote it to cryptocurrency mining. That would not only allow to maintain the guaranteed load on the nuclear power plants, but also ensure that companies can attract extra funds. Therefore, it would open the way to a fundamentally new economy, new approaches, a new market model”.
The proposal follows Ukraine’s optimistic stance regarding the crypto mining sector. The country’s Ministry of Digital Transformation said earlier this year that it won’t regulate the industry because it’s already self-governed by blockchain’s consensus mechanisms. At the time, the ministry said: “We remain loyal to mining activities that form part of open decentralized networks. Mining does not require regulatory activity from governmental oversight bodies or other third-party regulations, this activity is regulated by the protocol itself and network members”.
We’ll have to wait and see whether or not Energoatom accepts Buslavet’s proposal.
Vitalik Buterin: Ethereum could play a leading role in assisting with global crisis
Ethereum co-founder Vitalik Buterin, believes Ethereum can play an important role in a future global crisis. Speaking at the Ethereal Summit 2020 on 7 May about the current global crisis as more than just financial, he noted the levels of political discord and distrust between countries highlights the need for a network like Ethereum.
He said: “I definitely think that there’s a role for blockchains — and Ethereum in particular — to play in being this kind of neutral global player role [for] these systems, currencies, and applications to interact. I think anything created and maintained by nation-states can’t play that role”.
Buterin agreed when asked by Russo whether he thought of Ethereum as a network capable of connecting these nations with ETH as the currency. He mentioned “concerns around censorship, privacy and institutions” as major factors encouraging people to look towards cryptocurrency and blockchain technology.
He described the current situation as only “one third” financial and reported that cryptocurrencies like ETH could grow during this time by addressing non-financial problems. He continued, “The cryptocurrency space… for the first decade or so, it was really focused on the financial aspects — censorship resistance of money… but here in 2020 we’re definitely seeing a lot of the same themes, but it’s somewhat less financial than before”.
Hundreds of Bitcoin ATMs deployed in April
More bullish news for Bitcoin as hundreds of Bitcoin ATMs were installed across the globe in the month of April.
Despite coronavirus-induced global economic turbulence and lockdown restrictions, Bitcoin ATM tracking website Coin ATM Radar reported there are at least 7,729 cryptocurrency ATMs in 72 countries. In addition to these, there are also 148,849 services facilitating the buying and selling of cryptocurrencies, such as newspaper and mall kiosks. Since the beginning of the year, the number of Bitcoin ATMs has grown by 21%.
The country with the most ATMs is the United States with a grand total of 5,749 machines nationwide. Canada comes next with 771 Bitcoin ATM locations, followed by the UK with 296. At the beginning of May, Coin ATM Radar reported there were 7,784 crypto ATMs.