Stan Druckenmiller Buys Bitcoin as Dollar Inflation Hedge

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  • Stanley Druckenmiller told CNBC yesterday that he owns some Bitcoin alongside his gold holdings
  • The billionaire investors said that he had diversified his investments to include Bitcoin because of a “high probability” of inflation in the U.S
  • Druckenmiller added that he only owns “a tiny bit” of Bitcoin due to its higher risk/reward nature

Another week, another institutional financial figure turns bullish on Bitcoin. This time it’s the turn of Stan Druckenmiller, a name many in the cryptocurrency space won’t be familiar with, but one who watchers of traditional markets certainly will be – Druckenmiller is an investor and hedge fund manager worth $4.4 billion. A known heavy gold holder, Druckenmiller yesterday told CNBC that he had added Bitcoin to his portfolio due to the potentially damaging effect of inflation caused by the trillions of dollars the U.S. government has printed this year.

Bitcoin Bet Will “Probably Work Better” Than Gold

Druckenmiller added his name to the growing list of institutional Bitcoin buyers when he told CNBC yesterday that “if the gold bet works, the Bitcoin bet will probably work better” given the fact that it’s better suited to the modern, digital world. Druckenmiller said that Bitcoin’s appeal as an asset class “has a lot of attraction as a store of value to both millennials and the new West Coast money”, adding his voice to others such as JPMorgan and Charles Schwab who have said millennial investors prefer Bitcoin over stocks.

Druckenmiller also reaffirmed a view held by others that the fact that Bitcoin has been going for 13 years shows that it is not a flash in the pan, adding that “with each passing day it picks up more stabilization of brand.”

Druckenmiller Predicts Inflation in 5-6 Years

The reason why Druckenmiller is so bullish on Bitcoin and gold is because he predicts with “high probability” that the U.S will see inflation within 5-6 years due to the “extraordinary action taken by the Fed” in printing trillions of dollars this year to help fight the impact of the coronavirus.

There was however a note of caution in Druckenmiller’s assessment of Bitcoin when he told the reporter Kelly Evans “You’ve overstated…my enthusiasm for Bitcoin”, adding that he only owns a “tiny bit of it” in comparison to his gold holding.

This position is the same as that taken by other institutional investors such as Raoul Pal and Paul Tudor Jones, who know that Bitcoin is a high risk/high reward play, meaning that owning a small amount could still be enough to return outsized rewards while minimizing risk.