Crypto-Mastermind summary:

  • Formerly Bitcoin-critical ex-hedge fund manager of the Quantum Fund and billionaire Stanley Druckenmiller announced that he had invested in Bitcoin as a protection against currency devaluation.

  • Druckenmiller thinks that Bitcoin could outperform gold if more money flows into safe-haven assets.

  • More and more large and reputable investors are acquiring Bitcoin, which could increasingly promote its general acceptance.

Once again, an early crypto-critical investor has changed his mind. Recently, hedgefund manager of Quantum Fund and billionaire Stanley Druckenmiller talked about Bitcoin in an interview with the U.S. TV station CNBC. Druckenmiller has already been successful with its investment management during the financial crisis of 2008. Now, in his view, the next crisis is imminent. He sees Bitcoin as a possible hedge against inflation.

Bitcoin as protection against „inevitable“ inflation

The famous investor Stanley Druckenmiller founded the Duquesne Capital fund in 1981. As senior portfolio manager for George Soros‘ Quantum Fund, he also managed the fund’s assets until 2000. According to Forbes, Druckenmiller’s current net assets are around $4.4 billion.

Druckenmiller told CNBC that he is even holding Bitcoin in his „Dollar Decline Basket“ as a protection against currency devaluation. He stated that Bitcoin „has been around for 13 years and with each day that passes, it takes more of its stabilization“.

This is not entirely true, since the Bitcoin White Paper was not published until late 2018 and the Genesis Block was made in early 2019. However, there is no need to reproach Druckenmiller here, as he is new to cryptocurrencies.

Gold still has the larger share in his portfolio, though. The billionaire considers a coming inflation to be inevitable in any case, given the current economic situation:

„When you look at the extraordinary measures taken by the Fed and the fact that they’re monetizing the debt, I think it’s a high probability that we get inflation in the next five or six years, starting maybe in a year or two … Particularly with the vaccine, now the economy could run very hot, at the same time all the stimulus is in the pipeline, at the same time we have challenged supply chains between the United States and China.”


The number of major investors in the cryptomarket is increasing

In contrast to his statements just a year ago, however, Druckenmiller is positive about Bitcoin. He cites the illiquidity, thin order books and better data basis in comparison to gold. In his opinion, Bitcoin could outperform Gold if a large amount of capital floats in so-called safe-haven assets:

„Bitcoin could be an asset class that has a lot of attraction as a store of value to both millennials and the new West Coast money … Frankly, if the gold bet works the Bitcoin bet will probably work better because it’s thinner, more illiquid and has a lot more beta to it.”

Back in 2019, the investor expressed distrust of the cryptocurrencies and said he did not understand what makes Bitcoin a store of value. Even before that, he did not consider Bitcoin an effective medium of exchange due to its volatility and the time required to complete transactions.

Raoul Pal, CEO of Real Vision and former hedgefund manager of Goldman Sachs, who himself holds over 50% of his assets in Bitcoin, twittered that the news about Druckenmiller’s investment was very important for Bitcoin:

„The significance of the world’s greatest and most respected money manager Stan Druckenmiller saying just now that he is long Bitcoin cannot be overstated. That has removed every obstacle for any hedge fund or endowment to invest…“

In addition to Druckenmiller and Pal, the famous hedgefund manager Paul Tudor Jones is also invested in Bitcoin with 2% of his assets. And investor Bill Miller also estimates that the big banks will have more involvement in Bitcoin. The more respected investors turn to the crypto market, the easier it will be for others to follow.

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