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Legendary Hedge Fund Manager Ray Dalio: Bitcoin Has Merit, Is Like The Younger Generation’s Alternative to Gold

Legendary Hedge Fund Manager Ray Dalio: Bitcoin Has Merit, Is Like The Younger Generation’s Alternative to Gold

Dalio

Bitcoin and gold, Kiev, Ukraine, Sept. 19, 2017. Credit: bodnarchuk/ iStock, https://www.istockphoto.com/portfolio/bodnarchuk?mediatype=photography

Billionaire investor and hedge-fund founder Ray Dalio said he is impressed with Bitcoin, although less than two years ago, he said Bitcoin was not the best way to store value as it and other cryptocurrencies are fundamentally flawed.

“It has been an amazing accomplishment for Bitcoin to have achieved what it has done, from writing that program, not being hacked, having it work and having it adopted the way it has been,” Dalio told MarketWatch on Wednesday.

Dalio founded Bridgewater Associates, the largest hedge-fund firm in the world. He manages $223 billion of assets under management as of Nov. 26, 2021, up from $16.9 billion in September 2020, and has an estimated net worth of $20 billion.

Dalio is regarded as one of the greatest innovators in the finance world, having popularized many commonly used practices such as risk parity, currency overlay, portable alpha and global inflation-indexed bond management, Bloomberg reported.

Dalio said last week, “I believe in the blockchain technology. There’s going to be that revolution, so it has earned credibility.”

Dalio has admitted that he owns “a little bit” of bitcoin, saying it is “almost a younger generation’s alternative to gold. Bitcoin is like gold, though gold is the well-established blue-chip alternative to fiat money.”

Dalio is a champion of capitalism as a proven way of expanding living standards and economic growth but he warned in an April 2019 essay on LinkedIn entitled “Why and How Capitalism Needs to Be Reformed,” that U.S. leaders should treat the wealth and income gap as a national emergency.


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In that essay, Dalio said inequality posed an existential threat. “…flaws in American capitalism have created destructive and self-reinforcing gaps in education, social mobility, assets and income — and the result could be another revolution,” he wrote.

Dalio acknowledges that Bitcoin “has some merit,” he said, despite the fact that he said he thinks it has “no intrinsic value, but it has imputed value.”

However, Dalio continues to be concerned about the possibility of governments outlawing Bitcoin.

“Bitcoin has a number of other issues. If it is a threat to governments, it will probably be outlawed in some places when it becomes relatively attractive,” he said. “It may not be outlawed in all places. I don’t believe that central banks or major institutions will have a significant amount in it.”

“I’m not an expert on bitcoin,” Dalio told MarketWatch, “but I think it has some merit as a small portion of a portfolio.”

Bitcoin, a scarce product like gold, has competed with the most popular precious metal for investors’ attention as a hedge against inflation.

Millennials have a preference for cryptocurrencies and they’re becoming more powerful in the investing universe, JPMorgan strategist Nikolaos Panigirtzoglou said in November. There is “little doubt” bitcoin’s competition with gold will continue, he said, suggesting a long-term bitcoin price target of $146,000. The largest U.S. bank has predicted that number before for Bitcoin — in January, 2021 when Bitcoin was $30,000.

Bitcoin was trading at $46,858.70 at the time of publication, after reaching an all-time high of $68,990.90 on Nov. 9, 2021.

In January 2021, Dalio posted on his company website an essay, “Our Thoughts on Bitcoin,” in which he attempted to control how his words are portrayed in the media.

“I know how much one needs to know in order to have a valuable opinion in the markets, so I wouldn’t bet on my own views. Still, people demand my non-expert assessment of Bitcoin and clarifications in my own words are better than distortions in the media,” he wrote.

“I believe Bitcoin is one hell of an invention. To have invented a new type of money via a system that is programmed into a computer and that has worked for around 10 years and is rapidly gaining popularity as both a type of money and a storehold of wealth is an amazing accomplishment.”