• Hedge fund veteran bets on Bitcoin as an inflation hedge.
• The U.S. national debt climbs to $35.7 trillion.

In a recent interview with CNBC’s Squawk Box, billionaire hedge fund manager, Paul Tudor Jones, outlined his strategy for navigating inflation. 

The veteran highlighted his focus on assets like gold, Bitcoin [BTC], commodities, and Nasdaq tech stocks while steering clear of fixed-income investments. He stated,

“I’m long gold, I’m long Bitcoin.” 

Jones explained that his portfolio is designed to benefit from inflationary trends, drawing on examples such as Japan, where inflation outpaces interest rates.

Gold and BTC’s performance

Worth noting that both gold and Bitcoin have showcased strong performances this year, underscoring their roles in inflation-hedging strategies. Gold reached an all-time high (ATH) of over $2,750 per ounce on the 23rd of October.

This rise was driven by the upcoming U.S. elections, the Middle East conflict, and expectations of further monetary easing. According to Business Insider, the asset has appreciated by 33% this year.

Meanwhile, the king coin also posted triple-digit gains over the past year. According to CoinMarketCap, Bitcoin was up by over 117%. At press time, it sat just 9.8% below its March ATH. 

Stock market gains tied to inflation?

Jones’ comments sparked interesting reactions from the Bitcoin community, where enthusiasts often promote the coin as an inflation hedge.

One such enthusiast was Anthony Pompliano, founder and CEO of Professional Capital Management.

He emphasized Jones’ insight into how younger investors are turning to the Nasdaq as an alternative hedge against inflation, in contrast to traditional assets. 

The CEO added his own observation, stating, 

“Finally we can admit that the stock market goes up because of the debasement of the currency.” 

This suggested that rising stock prices may not be fueled by organic growth alone. 

The state of the U.S. economy

The hedge fund manager also addressed the United States’ rising national debt. The debt has surged from 40% to 100% of GDP over the past 25 years, now standing at $35.7 trillion. 

Moreover, according to J.P. Morgan’s September CPI report, the Consumer Price Index rose by 0.2% MoM and 2.4% YoY.

Compared to the 2.5% YoY rise recorded in August, this indicated a slight decrease. The dip indicated gradual progress toward the FED’s target of 2%.

Furthermore, the Federal Reserve Bank of New York’s report, revealed that U.S. consumers expect median inflation to hover around 3% over the next 12 months. 

Jones stated that the only way for a nation to escape such high levels of debt is by inflating its way out of it. 

That would involve keeping interest rates below inflation and creating a small tax on consumers. This, combined with nominal growth above inflation, can help reduce the debt-to-GDP ratio over time.

As inflation remains a persistent challenge, Jones’ multi-asset strategy of incorporating traditional and digital assets continues to attract attention, reflecting how investors are navigating economic uncertainty.