Paul Tudor Jones is optimistic about Bitcoin (BTC) and other commodities, as he believes that "all roads lead to inflation" after the US presidential election in November, the veteran investor told CNBC on October 22.
"I may own a portfolio that includes gold, Bitcoin, commodities, and NASDAQ [tech] stocks, and I won't hold any bonds," Jones, the founder of Tudor Investment Corporation hedge fund, said on CNBC's Squawk Box program.
The median 12-month ahead consumer inflation expectation of US consumers is around 3%, according to an October 15 report from the Federal Reserve Bank of New York, part of the US central banking system.
The Federal Reserve has set a long-term inflation target of 2% per year.
However, Jones believes that increased US government spending and potential tax cuts make it almost impossible to achieve those targets without significant policy changes.
"We'll quickly find ourselves in a debt trap if we don't seriously address our spending problem," Jones said.
The Congressional Budget Office forecasts the federal government will run a $1.9 trillion deficit in fiscal year 2024.
This figure is expected to rise to $2.8 trillion by 2034, according to the CBO.
"The way to get out of this is to create inflation to reduce the debt," Jones stated, citing Japan as an example of a country that has pursued this strategy.
Investors are turning to gold and BTC in a so-called "flight to quality" trade, bracing for a "catastrophic scenario" amid rising geopolitical tensions, according to an October 3 report by JPMorgan.
The flight to quality refers to the increased demand for gold due to factors such as "persistently high geopolitical uncertainty since 2022, high long-term inflation uncertainty, and concerns about persistently high government deficits in major economies," among other factors, JPMorgan said.
"The fact that Bitcoin ETFs have started to see inflows again in September after outflows in August suggests that retail investors may also be viewing gold and Bitcoin similarly," the report stated.
At around $67,000, BTC price has risen more than 50% YTD, according to CoinMarketCap.
Analysts are eyeing price targets for BTC just below the current ATH of $73,679.
