Paul Tudor Jones is reaffirming his bullish stance on bitcoin, calling it the most effective hedge against inflation, while warning that U.S. equities may be set for a prolonged period of weak returns.

In an interview on the Invest Like the Best podcast, the billionaire investor said bitcoin’s fixed supply gives it a decisive advantage over traditional assets like gold. With a hard cap limiting the number of coins in circulation, he argued, bitcoin offers a level of scarcity that gold cannot match.

“Bitcoin is the best inflation hedge — unequivocally, even more than gold,” Jones said.

He linked bitcoin’s strength to periods of aggressive monetary and fiscal expansion, such as the stimulus unleashed after the 2020 market crash. According to Jones, these environments tend to fuel inflation trades, with bitcoin emerging as a standout performer.

“When that level of liquidity enters the system, inflation trades tend to take off,” he said.

At the same time, Jones expressed concern about the outlook for stocks, warning that current valuations leave little room for meaningful upside. He said investors buying into the S&P 500 at present levels could face negative returns over the next decade.

“It’s going to be really hard to make money in equities from here,” he said.

He also pointed to growing supply pressures in the market, including a pipeline of major IPOs — such as SpaceX and leading artificial intelligence companies — alongside a slowdown in corporate share buybacks, both of which could weigh on stock prices.

While Jones stopped short of calling the market a bubble, he highlighted the ratio of U.S. stock market capitalization to GDP as a key indicator flashing warning signs. The metric remains near historic highs, approaching levels seen during previous market peaks, including the dot-com era.

With the ratio around 250%, Jones suggested equities are stretched and vulnerable to a correction.

“We’re clearly heavily allocated to equities,” he said, cautioning that any downturn could have far-reaching consequences.

Beyond market performance, Jones warned that a sharp decline in stocks could spill over into the broader economy. Because capital gains account for a portion of government tax revenue, falling asset prices could widen the budget deficit and put pressure on the bond market.

“If capital gains revenues fall, deficits rise and bonds come under stress,” he said.

He added that such conditions could create a negative feedback loop, where weaker markets strain fiscal conditions and, in turn, further destabilize financial assets.

“It becomes self-reinforcing,” Jones said. “And that’s the risk.”