Ray Dalio, founder of hedge fund Bridgewater Associates, remains opposed to Bitcoin. He summarized his criticism again, but showed himself open to counterarguments. Despite his enthusiasm for gold he sees no future in the crypto currency.
Billionaire Ray Dalio is the founder of the world's largest hedge fund firm, Bridewater Associates, and for several years he was one of the 100 richest people in the world. Although the investor is not a fan of fiat money, he has already made negative comments about Bitcoin in 2017. At this year's WEF he was also of the opinion that "cash is trash", but that Bitcoin, unlike gold, was not an alternative. Yesterday, however, he showed himself open to criticism on Twitter and admitted that he "might be missing something about Bitcoin".
I might be missing something about Bitcoin so I’d love to be corrected. My problems with Bitcoin being an effective currency are simple... (1/5)
— Ray Dalio (@RayDalio) November 17, 2020
The Bitcoin critique by Ray Dalio
In a series of tweets, the investor laid out his criticism of the crypto currency, which does not seem to have changed much since 2017. He breaks it down into four points:
- Bitcoin, according to him, is not a good medium of exchange and has few application possibilities. This probably is a result of its high volatility.
- The crypto currency also wouldn't be a good store of value. The high volatility and weak correlation with prices of day-to-day goods couldn't protect its purchasing power very well.
- If Bitcoin nevertheless prevailed, Dalio believes many governments would ban it.
- Finally, he cannot imagine that central banks, large institutional investors and multinational companies will use the crypto currency.
Nevertheless, he showed himself open to counterarguments on Twitter. He said that he would gladly be corrected if he was wrong about these things and actually missed something. His criticism was indeed addressed in thousands of comments. By the way, all of his points were covered in Lyn Alden's detailed article "7 misconceptions about Bitcoin".
Other investors changing their minds
This year some (especially institutional) investors have changed their perception of Bitcoin. As the first well-known hedge fund manager, Paul Tudor Jones saw potential in Bitcoin as a store of value this May. He, like many others, compared Bitcoin to gold as a hedge against inflation. He also described the crypto currency as currently the "fastest horse" on the market.
Another former Bitcoin opponent is Ex-Prudential CEO George Ball. He too saw the increasing quantitative easing (QE) of central banks as a decisive factor that changed his opinion.
"I have never said this before and I have always been a blockchain, crypto currency and Bitcoin opponent. But as you can see now, the government cannot stimulate the markets forever, the flood of liquidity will end. [...] This will probably lead to very wealthy investors and traders turning to Bitcoin or something similar." - George Ball, Ex-Prudential CEO
