← All insights

Why Bitcoin: Deficits, a Fixed Supply and the Case for a Hard Asset

Saylor, Tudor Jones and Fink each arrived at bitcoin from a different direction. Buffett still thinks it is worthless. Here is the case, the counter-case, and why I own it.

Bitcoin is the largest position in my portfolio, so I owe readers a clear explanation of why. The short version: I think the most important number in markets right now is not an earnings estimate or a Fed forecast. It is the federal government’s balance sheet. And bitcoin is the one asset I know of whose supply cannot respond to it.

That is a strong claim, and some of the best investors alive disagree with it. So this piece lays out the case as its three most influential supporters make it (Michael Saylor, Paul Tudor Jones and Larry Fink), then gives the strongest objection, from Warren Buffett, a fair hearing.

The backdrop: a debt problem with no easy exit

The numbers have stopped being abstract:

  • US federal debt passed $40 trillion this autumn.
  • The deficit for fiscal 2026 is running at roughly $2 trillion, close to 6% of GDP, in an economy that is not in recession.
  • Net interest on the debt is now about $1 trillion a year.
  • The 10-year Treasury yield is around 5.3%, its highest since 2007, and the Federal Reserve raised rates in September rather than cutting.

When a government owes this much, there are only a few ways out: much higher taxes, much lower spending, default, or letting inflation erode the real value of the debt. Historically, the last one is the path of least resistance. That is the starting point for everything that follows.

The supply argument

Money supply and bitcoin supply move in very different ways:

  • Dollars: US M2 money supply was about $23.2 trillion in July 2026, up roughly 5.4% in a year.
  • Gold: the above-ground stock grows by roughly 1.5–2% a year as new mines open, and higher prices encourage more mining.
  • Bitcoin: about 0.8% a year today, falling to roughly 0.4% after the next halving in 2028, and capped at 21 million coins forever. The 20 millionth coin was mined in March 2026, and the last one is expected around 2140.

No central bank, government or company can change that schedule. A higher price does not produce more bitcoin. For an asset meant to store wealth across decades, that property is the whole point.

Michael Saylor: bitcoin as “digital capital”

Saylor is the most aggressive version of the thesis. His company, Strategy, holds about 848,000 bitcoin, bought at an average of roughly $75,000 each, and keeps adding.

His argument is that bitcoin is the first asset that is absolutely scarce and can be moved anywhere instantly. In his framing, the dollar’s purchasing power has a half-life of about ten years; bitcoin’s is infinite. Strategy now packages that idea into “digital credit”: preferred shares that pay a high yield backed by its bitcoin.

Saylor also shows the risk of the idea when taken to an extreme. In June 2026 Strategy’s market value fell below the value of the bitcoin it owns. That happened because investors worried about the roughly $1.2 billion a year it owes preferred shareholders and about funding purchases by issuing more shares. Leverage turns a volatile asset into a fragile one. Owning the asset is a different thing from owning a company that borrows against it.

Paul Tudor Jones: the inflation hedge

Tudor Jones came to bitcoin as a macro trader, not a believer. In May 2020, in a letter titled The Great Monetary Inflation, he compared it to gold in the 1970s and put about 1–2% of his assets in it. By late 2024 his message was that “all roads lead to inflation”: governments will inflate their way out of their debts. He said he would own gold, bitcoin and commodities and hold no bonds.

He went further this April, calling bitcoin the best inflation hedge available, better than gold, because gold’s supply keeps growing and bitcoin’s does not. His firm’s latest filing showed it added to its bitcoin ETF position in the second quarter.

He is also candid about the risks. He named two himself: quantum computing powerful enough to break today’s encryption, and a real war, in which anything electronic would suffer.

Larry Fink: from sceptic to issuer

Fink’s shift may matter most, because he runs the world’s largest asset manager.

  • 2017: he called bitcoin “an index of money laundering.”
  • 2023–24: he was calling it a legitimate financial instrument and a kind of “digital gold.”
  • January 2025, at Davos: he said that if sovereign wealth funds put even 2–5% into bitcoin, its price could reach $500,000 to $700,000. He added that he was not promoting it.

His 2025 letter to shareholders made the macro link explicit. He warned that the dollar’s role as the world’s reserve currency is not guaranteed to last forever. If the US does not get its debt under control, he wrote, investors could come to see assets like bitcoin as safer than the dollar.

BlackRock’s own iShares Bitcoin Trust now holds about $69 billion. Its research team has suggested 1–2% as a reasonable allocation for a diversified portfolio. Its August 2026 paper, written after bitcoin had fallen about 50% from its peak, still concluded that a small position would have improved a traditional 60/40 portfolio.

Warren Buffett: the case against

Buffett has never wavered:

  • 2018: he called bitcoin “probably rat poison squared.”
  • 2022: he said he would not pay $25 for all the bitcoin in the world, because it produces nothing. A farm grows food and an apartment building collects rent; a bitcoin just sits there.
  • 2022: Charlie Munger, at the same meeting, called it stupid and evil.
  • May 2026: Buffett warned that he has never seen people in “a more gambling mood.”

This objection deserves to be taken seriously, and in its own terms it is correct. Bitcoin has no earnings, no dividends and no cash flow, so its value depends entirely on what the next buyer will pay. That makes it impossible to value the way Buffett values a business. It also means a 50% decline, like the one from October 2025’s peak of about $126,000 to this summer’s low, can happen with no change in any fundamental you can point to.

The irony is that Buffett shares the worry that drives bitcoin buyers. At Berkshire’s 2025 meeting he said fiscal policy is what scares him most about the United States. He spoke about governments’ tendency to debase their currencies. He said Berkshire would not want to own assets in a currency that was going to hell.

His answer to that risk is to own productive businesses with pricing power, not a scarce digital asset. That is a reasonable answer. It is just not the only one.

Where I come out

I think both sides are right about different things.

Buffett is right that bitcoin is not an investment in the way a business is. It is closer to money, or to gold: a store of value whose price rests on trust in its scarcity and its network. Assets like that should be sized with that in mind.

Saylor, Tudor Jones and Fink are right that the monetary environment has changed. Unsustainable deficits, a central bank still fighting inflation, and long-term yields above 5% make a fixed-supply asset more valuable as insurance, not less. Gold has done that job for centuries, and bitcoin is a newer, more volatile, more portable version of the same idea.

What I would not claim is that bitcoin is the only true store of wealth. Gold, real assets and great businesses have all preserved purchasing power through inflationary decades. Bitcoin’s case is that it does the job with a supply schedule no one can change. Its weakness is that it has only 17 years of history and a habit of falling by half.

The risks I watch

  • Volatility: drawdowns of 50% or more have happened in almost every cycle, including this one.
  • It can trade like a tech stock: in a market sell-off bitcoin has often fallen alongside the Nasdaq rather than protecting against it. BlackRock calls this its “dual personality.”
  • Quantum computing: Google researchers estimated this year that breaking bitcoin’s encryption may need far fewer qubits than previously thought. Upgrades are being debated, but no fix has been agreed yet.
  • Regulation: the CLARITY Act, which would have set clear US rules for crypto markets, failed in the Senate in September 2026.
  • Concentration and leverage: large holders that borrow against their bitcoin, as Strategy does, can become forced sellers.
  • Custody: coins held on an exchange carry that exchange’s risk; coins held yourself carry the risk of losing the keys.

Those risks are why I size the position deliberately, stress-test it alongside everything else I own, and hold hedges against a sharp crypto decline. You can see the current weights, and how the position has actually performed, on the portfolio page.

This article is for information only and is not investment advice or a recommendation to buy or sell any security or digital asset. It summarises public statements and reporting as of early October 2026. The author owns bitcoin (the largest position in the portfolio), ether, Chainlink, and an inverse bitcoin ETF used as a hedge. Views are the author's own and do not represent any current or former employer.

Sources