During a Tuesday appearance on CNBC's "Squawk Box," billionaire hedge fund manager Paul Tudor Jones shared his latest insights into the market, claiming that inflation trades will be challenged when asked about Bitcoin by co-host Andrew Ross Sorkin:
You have to watch what the central bank does. Clearly of the inflation traders of the pandemic era are gonna be challenged right now.
"Clearly all the #inflation trades of the pandemic era are going to be challenged right now," says @ptj_official on #crypto #bitcoin. "The things that performed the best since March of 2020 are going to probably perform the worst as we go through this tightening cycle." pic.twitter.com/paOXucYG2B— Squawk Box (@SquawkCNBC) January 11, 2022
The longtime investor says that it will be "tough sledding" for assets that are viewed as an inflation hedge, adding that things that performed best since March of 2020 will "probably" perform the worst during the ongoing tightening cycle.
That said, he cannot predict exactly whether these assets will go down or up on a relative basis.
Jones initially revealed that he had bought Bitcoin as a hedge against inflation in early May 2020. The endorsement of the investment legend was viewed as a major win for the biggest cryptocurrency.
In October 2020, when Bitcoin was only just gearing up for a new bull run, Jones said that the cryptocurrency was only in its first inning.
Bitcoin had soared more than 630% since Jones revealed his position, peaking at roughly $69,000 in November 2021.
In October, Jones noted that crypto was winning the race against gold as the world is becoming increasingly digitized.
Speaking of his outlook on the U.S. Federal Reserve, the investor said that Chairman Jerome Powell is now playing catch-up:
I think that Jay Powell is going to play catch-up…He's got a lot of catching up to do. And I think that's why you are seeing them talking about quantitative tightening because I don't think he can catch up fast enough. He's trying to deal with the inflation problem that he has right now.
He compared the current state of the market to "Animal House," a 1978 comedy directed by John Landis:
I kind of feel with regard to the markets it's a bit like…Remember in 'Animal House,' where right before the scene with the Deathmobile, one of the guys…they were all sitting around and the guy goes: 'It’s over, man. Wormer just dropped the big one.'
He drew parallels between the scene and the major shift in the Fed's policy, claiming that it will have "a lot of consequences" for a variety of asset prices.