Billionaire Jeff Gundlach Discusses When to Buy Crypto — Warns of Deflation Risk

Billionaire Jeffrey Gundlach, aka the Bond King, has shared his view on when to buy cryptocurrency. “You need a true Fed pivot,” he stressed. Gundlach also warned about the increasing risk of deflation, noting that it’s time to be bearish on the stock market.

Jeffrey Gundlach on Fed Rate Hikes, U.S. Economy, and When to Buy Crypto

The founder and chief executive of investment management firm Doubleline, Jeffrey Gundlach, shared his outlook on the U.S. economy, stock and bond markets, and when to buy crypto this week. Headquartered in Tampa, Florida, Doubleline has over $107 billion in assets under management (AUM) as of June 30.

In an interview with CNBC on the sidelines of the Future Proof conference Tuesday, the billionaire explained that it is too early to jump on the crypto bandwagon as the Federal Reserve is likely to raise more interest rates.

Commenting on whether it is a good time to buy cryptocurrency under the current market conditions, Gundlach opined:

I’d certainly not be a buyer today.

Gundlach is sometimes known as the Bond King after he appeared on the cover of Barron’s in 2011 as “The New Bond King.” Institutional Investor named him “Money Manager of the Year” in 2013 and Bloomberg Markets ranked him one of “The Fifty Most Influential” in 2012, 2015, and 2016. He was inducted into the FIASI Fixed Income Hall of Fame in 2017. His net worth is currently about 2.2 billion.

In the Tuesday interview, the billionaire stressed that the time to return to the crypto space would be when the Federal Reserve pivots from rate hikes and begins its “free money” policies. Citing the Federal Reserve’s hawkish stance and recession fears, Gundlach emphasized:

I think you buy crypto when they do free money again … You need a true Fed pivot.

He added that investors should not buy crypto when there are only “dreams” of a monetary policy pivot.

The Doubleline CEO also cautioned about the increasing risk of deflation, seeing it as the key threat to the U.S. economy and markets. He explained that it is time for investors to become more bearish on U.S. stocks, noting that the S&P 500 could fall 20% by mid-October.

“The action of the credit market is consistent with economic weakness and stock market trouble,” Gundlach described, elaborating:

I think you have to start becoming more bearish.

While admitting that stock picking is not his forte, he said: “You always want to own stocks, but I’m a little on the lighter side.” Nonetheless, he sees emerging markets as the biggest upcoming opportunity for equity investors.

Citing the risk of deflation, he suggested that investors dive into long-term U.S. debt securities. “Buy long-term Treasurys,” he advised, emphasizing:

The deflation risk is much higher today than it’s been for the past two years.

Regarding the time frame, he clarified: “I’m not talking about next month. I’m talking about sometime later next year, certainly in 2023.”

Recently, Tesla CEO Elon Musk also warned that a major Fed rate hike could lead to deflation, echoing the statement by Ark Invest CEO Cathie Wood that “Leading inflation indicators like gold and copper are flagging the risk of deflation.”