Why Paul Tudor Jones Sees a Bright Future for Bitcoin

To trend-spotting hedgie, the cryptocurrency is ‘the fastest horse,’ so he buys its futures.

Bitcoin is getting downright respectable. Now it can boast an endorsement from Paul Tudor Jones, who has a pretty decent rep of predicting investing and economic trends.

Jones becomes the first big-name hedge fund manager to invest in the cryptocurrency, which has long been the object of disdain among mainstream Wall Streeters. They term it as a haven for drug dealers and other unsavory souls, because its blockchain technology can make it easy to mask people involved in transactions.

“The best profit-maximizing strategy is to own the fastest horse,” wrote Jones, the founder and CEO of Tudor Investment, in a note to clients. “If I am forced to forecast, my bet is it will be Bitcoin.”

Jones titled his piece “The Great Monetary Inflation,” by which he means there will be an expansion in forms of money up ahead, not necessarily price inflation. As a store of value, he still ranks Bitcoin behind financial assets (No. 1), cash, and gold. Amid the current economic turmoil, however, Jones believes that Bitcoin will play “a growing role.”

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And up to a point, Jones is putting his money where his mouth is. He indicated that his Tudor BVI fund is allocating a low single-digit percentage of its assets in Bitcoin futures. His hedge operation is of the macro persuasion, which means it seeks to ride major trends it spots worldwide, particularly in interest rates and currencies. So Bitcoin is in Jones’ sweet spot.

Jones himself is well-known as a forecaster: He predicted the Black Monday stock market crash in 1987 and made a pile by shorting equities. His strong performance has ebbed somewhat lately, though, and he has suffered some investor redemptions. Tudor has an estimated $7.5 billion under management. An attempt to reach him for comment wasn’t immediately successful.

To be sure, the Bitcoin market is a volatile one, not for the faint of heart. The cryptocurrency reached an all-time high of $19,800 in 2018, tumbled to $3,952 at the end of that year, and climbed back to $12,024 in 2019. In March, Bitcoin went into another freefall as stocks tanked worldwide. It bottomed out at $5,672, as Washington help for the capital markets was announced, and rose anew to $9,826 Thursday, according to Coindesk.

Bitcoin has gradually gained greater acceptance. In 2017, Jamie Dimon, CEO of JPMorgan Chase publicly denounced the virtual currency as a fraud. And he went on to say: “It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed. … It’s just not a real thing, eventually it will be closed.”

Well, times have changed. JPM has accepted two well-known Bitcoin exchanges, Coinbase and Gemini Trust, as banking customers. Dimon later said he regretted his remarks about Bitcoin.

Meanwhile, Bitcoin futures now trade on the CME Group’s floor, where trading volume has jumped more than 40% from a year ago, the exchange said. Some 850 new accounts have opened in 2020, more than twice the pace of this time last year.

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Oklahoma Lawmakers Squelch Veto on Siphoning Pension Money

Legislature overrules governor’s objection to using retirement funds to meet current expenses. 

The Oklahoma legislature overrode the governor’s veto on the state budget proposal, which aims to divert money from the state’s pension plans to fund education needs. 

Gov. Kevin Stitt vetoed the $7.7 billion budget for fiscal year 2021, as well as two additional state House bills he said would take tens of millions of dollars away from teachers, law enforcement workers, and firefighters. 

“We have made great progress shoring up our retirement systems in the last few years, and now is not the time to undo that progress,” Stitt said in a statement

“While I understand the importance of a balanced budget, it is fiscally irresponsible to do so at the expense of the solvency of these pension systems,” he added.

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The governor argued the budget measures would lower funded ratios for the state’s retirement systems back down to 2014 levels. 

Unfunded liabilities for the state’s pension plans were last reported as $6.5 billion, according to the governor’s veto documents.

A proposal to cut funds from the state Teachers’ Retirement System alone would increase unfunded liabilities by $186.2 million, the governor said. Oklahoma Teachers has a roughly 72% funded ratio, as of fiscal year 2019. 

Another proposal to cut dedicated revenues to the state’s Firefighters’ Pension and Retirement System, Police Pension and Retirement System, and Law Enforcement Retirement System would similarly increase unfunded liabilities. The Oklahoma Police Pension was fully funded in 2019. 

Unpersuaded by Stitt’s arguments, a broad majority of lawmakers in the state House and Senate overturned the veto on the state budget measures. Stitt is a Republican, so the GOP-controlled legislature has broken from him on this issue.

Many contended that the funds intended for the pension systems were required immediately to support the state’s schools and teachers. Plus, the reduction in state funding would be repaid on a five-year schedule, according to state documents.  

Others sided with the governor on the pension plans, including the minority state Senate Democrats. 

“While we agree funding is needed to prevent cuts to education, we do not believe taking funds intended for public pensions is the way to do it,” read a statement from Senate Democratic Leader Kay Floyd on behalf of the Democratic Caucus. 

The Senate Democrats instead advocated that the state legislature pass a cost of living adjustment (COLA) for retirees. 

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