Paul Tudor Jones commented on the current macroeconomic outlook, and the high inflation issue causing financial headwinds for the entire world. The U.S. Federal Reserve (Fed) is trying to mitigate this problem by hiking interest rates. So far, their methods seem ineffective.

In that sense, Paul Tudor Jones compared inflation with “toothpaste”, he said: “Once you get it out of the tube, it’s hard to get it back in”. Bitcoin, Ethereum, and cryptocurrencies will continue to shine in this environment as the global economy faces a potential recession.

Paul Tudor Jones: The Market Changed, Bitcoin Will Create Value

As the Fed attempts to combat inflation, and assets get pushed down as a consequence of high-interest rates, Paul Tudor Jones spoke about the different conditions for investors. Over the past years, equities and risk-on assets saw an influx of capital at certain points of the year.

This allows financial assets to soar, as people put their cash into stocks, Bitcoin, and other assets. In a high-interest rates environment, investors will feel more inclined to stay in cash and avoid risk. This might cap the capacity for financial assets to follow their regular cycle.

“It’s so hard to take what we’ve learned from investing for the past 12 years and put it behind you, but you have to. The market changes,” says @ptj_official. “If 2 year rates are 4.3% or higher, you got to wonder if you get the same flush into assets that you normally see.” pic.twitter.com/Bd0UU1HLuc

— Squawk Box (@SquawkCNBC) October 10, 2022 

In that sense, the legendary investor spoke about the creation of a new normal as the Fed’s monetary policy goes “off the rails”. The financial institution is trying to get the economy back on track, but PTJ questioned the Fed’s pace as he claims it might be moving too fast.

These conditions, high inflation mixed with a Fed moving too quickly for the sake of financial assets, might be beneficial for Bitcoin and crypto. In the coming decades, the Fed and other central banks might end their “monetary policy experiment”, PTJ said, leading to a period of less liquidity and economic austerity.

In the long run, these financial institutions will move from fueling inflation with more money to creating confidence in the value of their currencies. Bitcoin will benefit from both situations, a time of more money and a period of “fiscal retrenchment”. Paul Tudor Jones said:

I’ve always had a small allocation of Bitcoin (…). Whoever is the president in 24 is going to have to deal with debt dynamics that are so dire. We’re going to have to have fiscal retrenchment. In a time where there’s too much money, something like crypto, specifically Bitcoin and Ethereum, that will have value at some point.