Ray Dalio: Bitcoin Could "Serve As a Diversifier to Gold"
Up until recently, Wall Street investor Ray Dalio had been known as a Bitcoin skeptic. That appears to be changing.
Dalio is the co-CIO of one of the world's largest investment funds, Bridgewater Associates. He is personally valued at $16.9 billion, according to Forbes.
In a Reddit "Ask Me Anything" on Tuesday, Dalio wrote that Bitcoin has "over the last ten years established" itself as a "gold-like asset alternative." He further noted that Bitcoin is similar to gold because it has a limited supply, is mobile, and can be viewed as a store of wealth.
Dalio elaborated that Bitcoin is potentially a "diversifier" to gold, which can be owned alongside the precious metal and other assets:
So it could serve as a diversifier to gold and other such store hold of wealth assets. The main thing is to have some of these type of assets (with limited supply, that are mobile, and that are storeholds of wealth), including stocks, in one's portfolio and to diversify among them. Not enough people do that.
This somewhat positive comment about Bitcoin came in response to a user who asked if "Bitcoin [is] a potential answer to this issue that the global new world fiat monetary system has caused?" By "issue," the user was referring to the vast amount of wealth inequality that has formed over recent decades.
This latest comment on the leading cryptocurrency is a big step forward for the investor, who has asserted for years that bitcoin lacks the ability to store wealth over time.
At the World Economic Forum's 2020 meeting in Davos, Switzerland, Dalio said that he thinks Bitcoin is ineffective at storing value. Speaking with CNBC in an interview at the time:
"There’s two purposes of money, a medium of exchange and a store hold of wealth, and Bitcoin is not effective in either of those cases now."
The past few weeks have seen the billionaire investor change his tune, at least to some extent. Prior to this, he admitted in a Twitter thread with financial analyst Preston Pysh that he's open to changing his mind to Bitcoin if someone presents him with evidence contradicting his beliefs.
But as he stated in said thread and again in this recent Reddit AMA, one of his persisting concerns is the fact that central banks are likely to prefer gold over Bitcoin, from the regulatory and reserve preference standpoints:
I have a strong preference for holding those things which central banks are going to want to hold and exchange value in when they are trying to transact.
Last Macro Investor Skeptical of Bitcoin
While value investors like Warren Buffett are still hesitant to invest in Bitcoin due to the lack of cash flows, Dalio represents one of few famous macro investors that haven't, at least to some extent, expressed their interest in the pioneering cryptocurrency.
Last week, Paul Tudor Jones spoke highly of the asset, stating that a Bitcoin market capitalization of $500 billion would be "the wrong market cap in a world where you’ve got $90 trillion dollars of equity market cap, and God knows how many trillions of fiat currency."
Stanley Druckenmiller, who is friends with Tudor Jones, announced in early November that he thinks Bitcoin will "work even better" than gold if the "gold bet works." As the BTC Times reported previously, he said that a weak U.S. dollar is likely in the months ahead, which increases the chances that gold and Bitcoin outperform.
Druckenmiller is widely regarded as one of the world's leading macro money managers, having strongly outperformed the market for many years in succession.
Other names that worked at macro hedge funds, including Raoul Pal, Dan Morehead, and Michael Novogratz are now active in the cryptocurrency industry.