“It’s a great speculation,” Jones said in an interview with “Squawk Box” Monday morning. I’ve got “just over 1% of my assets in bitcoin. Maybe it’s almost 2. That seems like the right number right now.”
“Every day that goes by that bitcoin survives, the trust in it will go up,” he added.
Jones, founder and chief executive at Tudor Investment Corp. and largely considered one of the best macroeconomic traders ever, told investors in a recent letter that he’s betting on bitcoin as part of a far-larger strategy of maximizing profits.
But for investors who’ve followed Jones’ success in predicting the path of economic events, including his prescient bets against the U.S. stock market in 1987, his new foray into the world of cryptocurrency may seem unusual . But Jones defended his new investment, especially versus other stores of value like U.S. dollars.
Modern government-backed currencies, he argued, will almost always diminish in value over time. Many investors shy away from cash over the long term as legislatures continue to spend more than they generate in revenues and lean on central banks to pump cash into the economy, decreasing the purchasing power of each individual dollar.
“If you take cash, on the other hand, and you think about it from a purchasing power standpoint: If you own cash in the world today, you know your central bank has an avowed goal of depreciating its value 2% per year,” Jones added Monday. “So you have, in essence, a wasting asset in your hands.”
Bitcoin, on the other hand, isn’t subject to the whims of government spending, but is itself risky because it’s only 11 years ago, Jones said. He also confirmed that he has a portion of his portfolio invested in gold, a popular inflation hedge, and said he thought the metal could go “substantially higher” if inflation spikes.
“When I think of bitcoin, look at it as one tiny part of a portfolio. It may end up being the best performer of all of them, I kind of think it might be,” he said. “But I’m very conservative. I’m going to keep a tiny percent of my assets in it and that’s it. It has not stood the test of time, for instance, the way gold has.”
The investor told CNBC in late March that the stock market could shoot higher by June if Covid-19 cases began to peak. The S&P 500 is up more than 15% since those comments on March 26 and the Nasdaq Composite has since turned positive for 2020. Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.