Bitcoin (BTC 0.10%) popped more than 3% to a record high above $66,000 on Wednesday. The move follows the debut of the ProShares Bitcoin Strategy ETF (NYSEMKT: BITO) and bullish comments by a respected hedge-fund manager.
Billionaire fund manager Paul Tudor Jones believes investors are underestimating the threat posed by inflation.
"The No. 1 issue facing Main Street investors is inflation, and it's pretty clear to me that inflation is not transitory," Jones said during an interview with CNBC. "It's probably the single biggest threat to certainly financial markets and I think to society just in general."
Jones sees trillions of dollars of coronavirus-related stimulus measures driving a sustained increase in the prices of goods and services. This inflation, in turn, could damper the purchasing power of consumers, pressure the profits of businesses, and dent the returns of fixed-income investments like bonds.
"So the real question is how you defend yourselves against it," Jones said.
For Jones, one of the answers to that question can be found in the crypto markets. He views Bitcoin, which has a supply cap of 21 million coins, as a key hedge against inflation, superior in some respects to gold.
"It would be my preferred one over gold at the moment," Jones said during an interview with CNBC. "Clearly, there's a place for crypto."
Jones' comments come after the ProShares Bitcoin Strategy ETF began trading on Tuesday. The Bitcoin-futures-focused exchange-traded fund is designed to make it easier for investors to gain exposure to the popular cryptocurrency in their existing brokerage accounts, without the need to open and maintain separate accounts on digital-asset exchanges.
The ETF's launch has been hailed as a victory for the crypto industry, which has long sought legitimacy among regulators and professional investors.