In 2017, Bitcoin reached an all-time high of $20,000. By 2018, the price of the first cryptocurrency by market cap dropped by more than 50%. What happens later caught the attention of two legendary investors, Stan Druckenmiller, founder of Duquesne Capital, and Paul Tudor Jones, founder of Tudor Investment Corporation.
Druckenmiller has been giving interviews to several news outlets and analyst John Street Capital compiled them via his Twitter handle. The legendary investor expressed concerns about the current policy exercise by central banks around the world. He believes these institutions are making fiat currency “more questionable”.
For the first time, Druckenmiller revealed that during a phone call with Tudor Jones, he learned a fact that made him change his mind on Bitcoin and the potential of cryptocurrencies to become a hedge against central bank inflationary policies. Tudor Jones asked Druckenmiller the following:
“Do you know that when Bitcoin went from $17,000 to $3000 that 86% of the people that owned it at $17,000, never sold it?” Druckenmiller replied: Well, this was huge in my mind. So here’s something w/ a finite supply & 86% of the owners are religious zealots.
This conviction, Bitcoin holders’ diamond hands, and the economic outlook forced Druckenmiller and Tudor Jones to consider whether they should buy Bitcoin. As they revealed later after that, they became BTC investors during 2020.
Bitcoin, The New Gold For Younger Generations
Bitcoin has additional characteristics which the legendary investor used to measure its potential. Tudor Jones told Druckenmiller that the cryptocurrency became a brand after 13 years since its inception. The cryptocurrency achieved this with no marketing team or a CEO to command such strategy, it is driven by holders, its network effect, and the guarantee of its limited supply.
Duquesne Capital founder has only one regret when it comes to BTC, like many investors, he feels that he should have bought more.
I tried to buy $100M of $BTC at $6,200. It took me 2 weeks to buy $20M. I bought it all around $6,500, I think. So like an idiot, I stopped buying it.
Druckenmiller added that there is a generational shift led by “kid on the West Coast” and the younger investors. They consider Bitcoin as Druckenmiller saw Gold, a store of value, insurance against fiat currencies.
When comparing Ethereum and Bitcoin, Druckenmiller believes the latter has won the “store of value game”. He based his opinion on 3 points, BTC has a brand that has existed for around 13 years and a finite supply. The legendary investors claim ETH could be the “MySpace” of the crypto industry.
I’m a little more skeptical of whether it can hold its position. It reminds me a little of MySpace before $FB. Or maybe a better analogy is Yahoo before Google came along. Google wasn’t that much faster than Yahoo, but it didn’t need to be. All it needed to be was a little bit faster and the rest is history.
He predicts more appreciation for BTC’s price if the U.S. Federal Reserve and its Chairman, Jay Powell, “keep acting like he’s been acting”. As long as this continues, BTC and Gold will have wind to keep rising.
At the time of writing, BTC trades at $36,962 with small gains in the 1-hour and daily chart. In the weekly and monthly charts, BTC has a 5.9% profit and 35.9% loss, respectively.