In a recent interview with CNBC, billionaire investor Ray Dalio restated his preference for gold over Bitcoin, citing concerns about the cryptocurrency’s long-term viability as a store of value. According to Dalio, gold’s fundamental advantage lies in its independence; it can be physically owned and doesn’t rely on any technological infrastructure or third parties. This makes it a more stable asset in times of uncertainty.
Dalio pointed out that institutions and individuals who own Bitcoin may believe they are independent, but they remain reliant on a global network of machines and services to facilitate transactions. He emphasized that Bitcoin was originally designed for an apocalyptic scenario, which raises questions about its utility as a broader monetary solution.
This year, gold’s price has surged to record levels, largely driven by fears of currency debasement amid soaring government debts in the U.S. and other nations. Dalio has repeatedly urged investors to hedge against macroeconomic risks, and he views gold as a safer hedge compared to Bitcoin. In a previous discussion, he suggested that a minimum of 15% of an investment portfolio should be allocated to Bitcoin and gold.
Dalio expressed particular concern about Bitcoin’s future as a potential reserve currency for major economies, indicating that its traceable nature makes it susceptible to tracking and potential manipulation through advancements in quantum computing. He warned that as quantum technology progresses, it could pose significant risks to the security of digital assets, including the ability to hack into them.
While he acknowledged maintaining a “small percentage” of Bitcoin ownership, estimated at about 1% of his total wealth, his perspective on cryptocurrencies remains cautious. The recent announcement by the Czech National Bank regarding a $100 million investment in a diversified “test portfolio” of digital assets, including Bitcoin, highlights a growing interest in the crypto space among central banks, though the implications of such investments continue to be scrutinized.
Dalio also noted that rising national debts are a pressing issue beyond the U.S.; countries like the UK and France face similar fiscal challenges. He previously referred to these mounting deficits as potentially leading to a “debt-fueled heart attack,” suggesting that the economic landscape is fraught with risks that investors must navigate carefully.
With rising interest in both gold and Bitcoin, Dalio’s insights may influence a reevaluation of asset allocation strategies amidst an ever-evolving financial landscape.
