What billionaire Ray Dalio thinks about Bitcoin, cash and regulators

The founder of hedge fund Bridgewater Associates, billionaire Ray Dalio (Forbes estimates his fortune at $ 20 billion), said that investors should not be too dependent on cash and that there is a danger that governments could disrupt the crypto market. Therefore, he warns investors not to rely on cash for bitcoin.

Bitcoin at the beginning of September this year has grown by more than 60%. It happened after such well-known investors as Paul Tudor Jones and Stanley Druckenmiller provided support for cryptocurrencies.

Meanwhile, the largest digital currency has come under scrutiny from regulators concerned with how retail investors have drawn into cryptocurrencies.

In May, Dalio talked about owning bitcoins. According to him, the leading cryptocurrency looks like a more attractive store of value than gold. In addition, Dalio argued that the U.S. dollar is on the verge of devaluing to levels last seen in 1971, and China threatens the dollar’s role as the world’s reserve currency.

The digital dollar and other national cryptocurrencies, in his opinion, will be viable. Still, they will not take over the crypto market since they are not decentralized but controlled by central banks.

Speaking at the Salt conference, the founder of Bridgewater Associates said that bitcoin would be a competitive investment alternative if allowed to be used for payments, but added, “I think in the end, if it is successful, regulators will try to destroy it.”

Dalio went on to mention that the most prominent cryptocurrency has no intrinsic value:

Nonetheless, he recognizes Bitcoin as an “amazing achievement” because it has already stood the test of time, even though governments have long tried to discourage it.

The boss of the world’s largest hedge fund also downplayed El Salvador’s recent foray into Bitcoin, pointing out the fact that China and India want to get rid of cryptocurrency – “If you’re from El Salvador and talk about your alternative money, you know that’s different “.

Earlier, the billionaire admitted that he had been one of the holders of the flagship cryptocurrency for a long time. During the conference, Dalio confirmed that the cryptocurrency is still part of his portfolio, but he owns a tiny percentage of digital assets compared to gold.

Earlier, he also insisted that the best store of value today is precisely the yellow metal, which for millennia has proven its effectiveness in this matter.

He believes that during a period of growing inflation, investors should not keep their savings in cash, creating additional investment risks. In his opinion, the primary protection for an investor in such conditions is diversification by asset class. When it comes to diversification, “any” alternatives to the dollar should be considered, as its days have numbered.

The head of Bridgewater Associates believes that cash can pose additional risk for an investor during low rates and accelerating inflation.

Dalio suggested that investors diversify their country, currency, and asset class, taking tactical steps. “All of these asset classes will surpass cash,” added the billionaire.

“Cash is rubbish. Do not keep your funds in cash. I think the most important thing a private investor or any other investor can do is to diversify correctly, “Dalio said in the Squawk Box program at the SALT conference.

Later, at the SALT conference in New York, Dalio questioned the forecast issued earlier this week by Cathie Wood to Ark Management that Bitcoin would increase ten times in five years, saying it was for him. It doesn’t make any sense. Bridgewater’s Alpha II Flagship Net Fund is one of the top hedge funds. He manages $ 105 billion in hedge funds. In August this year, its growth was 1.4%.

Dalio also commented on the situation after Gary Gensler, chairman of the U.S. Securities and Exchange Commission, called on Congress to expand the powers of regulators to combat the cryptocurrency Wild West.

Gary Gensler said Wall Street’s primary regulator is working overtime to create a set of rules to protect investors by better regulating thousands of new digital assets and coins.

Regulatory authorities in the United States, Russia, India and several other countries strengthen their volatile digital asset market supervision. Nevertheless, wild leaps in speculative markets are still their object of desire, which states want to make them dance to their tune.

For example, the SEC previously threatened Coinbase, the first major US cryptocurrency exchange, to go public, with a lawsuit if it launches a new Lend loan product backed by digital assets.

The news sparked controversy over whether products that allow customers to earn interest on certain digital assets can be considered securities, and therefore whether they fall under the regulator’s jurisdiction.
Dalio said that he also has cryptocurrencies, but these assets are still small compared to his investments in gold. He added that “governments do not need alternative currencies,” but investors need to diversify their assets.

The investor predicted that the markets would change in the next few years as fiscal and monetary stimulus weakened. “This is a good stimulant, everything is on the rise, and it’s great. But when the effect wears off, the picture will be somewhat different, “he said.

Dalio also pointed out that once the Federal Reserve and other central banks worldwide begin to move away from highly loose monetary policy, stocks as an asset could come under pressure.

A similar opinion shares the PIMCO Bill Gross’s co-founder nicknamed “the bond king”. “Cash has been as trash for a long time, but now there are new contenders for the investment trash can. Bond funds are undoubtedly in this dumpster, but will stock follow? Profit growth must be double-digit and higher. Otherwise, they too could end up in the garbage truck, “he wrote in a column in early September.

The Fed monitors accelerating inflation and the situation with economic growth. Fed Chairman Jerome Powell believes that high inflation rates are temporary.

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