Legendary hedge fund manager and billionaire investor Ray Dalio, founder, chairman, and co-chief investment officer of Bridgewater Associated, has revealed he owns some bitcoin, and claimed he would rather own BTC than a U.S. government bond.
During an interview with CoinDesk, the 71-year-old American whose net worth is estimated to be around $18.7 billion, revealed he sees the U.S. dollar on the verge of devaluation on a level that was last seen in 1971, and that China is threatening the USD’s role as the world’s reserve currency.
In such an environment Dalio believes bitcoin, with its gold-like properties, could be an attractive savings vehicle. In an inflationary scenario, he revealed he would personally “rather have bitcoin than a bond.” He added he has “some bitcoin.”
Dalio, as CoinDesk reports, joins fellow billionaire Stanley Druckenmiller in taking a position in the flagship cryptocurrency. The broader traditional finance world has gone from ignoring or shunning cryptoassets to embracing them, with some institutions looking to profit from their volatility.
As CryptoGlobe reported, Dalio’s stance on cryptocurrencies seemingly started changing earlier this year, when he wrote that there’s a “possibility that bitcoin and its competitors can fill that growing need” for an alternative store of value. Earlier, he had admitted he “might be missing something about bitcoin.”
Nonetheless, the billionaire investor reiterated concerns that governments, fearing competition from bitcoin, could crackdown on the cryptocurrency space. Over a decade ago, when bitcoin was in its nascent stages, Dalio studied the rise and fall of the three most recent global reserve currencies: the Dutch guilder, the British pound, and the U.S. dollar, he said.
He added currency supremacy moves in three “cycles” that could occur simultaneously, passing through the creation of debt and financial assets, through an “internal cohesiveness clash cycle,” and the rise of another power to challenge the existing top currency. Whether a currency can withstand these cycles, he said, depends on the strength of the economy behind it.
Annualized inflation rate for the U.S. in the 12 months ending in April was 4.2%, above the Federal Reserve’s long-term target of 2%. While the rate is being compared to April 2020, a month where many of the world’s economies slowed down, to Dalio this could be a problem.
Chinese markets have been opening up to foreigners, and “still have an attractive bond market. They have attractive capital markets that are more open.” While China’s renminbi is possibly on the rise and the USD may be waning, he believes a neutral cryptocurrency like BTC could act as gold did in previous centuries and shoot up.
While the billionaire investor believes a diversified portfolio could have exposure to BTC, there are risks he believes need to be considered. He said:
One of the great things, I think, as a worry is the government having the capacity to control almost any of them, including bitcoin, or the digital currencies. They know where they are, and they know what’s going on.
If governments worry bondholders are selling in favor of bitcoin, the more likely a government could be to crack down on BTC. Dalio also noted that he sees both BTC and gold “probably” rise relative to bonds.
The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.
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