Renowned billionaire investor and Bridgewater Associates founder Ray Dalio has articulated a skeptical view of Bitcoin (BTC) as a long-term store of value and safe-haven asset, pointing to structural limitations that he believes will prevent its widespread adoption by major financial institutions.
During his appearance on the All-In Podcast on Tuesday, Dalio dismissed the popular narrative that Bitcoin can serve as a functional equivalent to “digital gold.” He stated plainly, “there is only one gold,” underscoring his belief in gold’s unique and unparalleled monetary status.
Gold vs. Bitcoin: A Fundamental Disconnect
Dalio’s argument rests on gold’s entrenched role in the global financial system. He described gold not as a speculative commodity but as “the most established money,” noting it is the second-largest reserve currency held by central banks globally, after the U.S. dollar. According to data from the World Gold Council, central banks have been net purchasers of gold for over a decade, holding over 35,000 metric tons as of early 2024.
“I don’t see why central banks would want to buy Bitcoin and hold it over the long term,” Dalio said. His point highlights a critical divergence: while central banks actively manage gold reserves as a strategic asset, they have shown no public inclination to accumulate cryptocurrencies, citing volatility, regulatory uncertainty, and custody challenges.
Persistent Technical and Privacy Concerns
Dalio reiterated long-standing concerns about Bitcoin’s architecture. He pointed to its lack of inherent privacy, noting, “any transaction can be monitored.” While pseudonymous, Bitcoin’s public ledger means all transactions are permanently traceable, a feature that contrasts with the bearer nature of physical gold and poses challenges for institutional adoption where confidentiality is often valued.
He also flagged the existential threat posed by future quantum computing. Current cryptographic protocols securing Bitcoin could potentially be broken by sufficiently advanced quantum computers, which could compromise private keys and transaction integrity. While this is a theoretical risk for most encryption today, Dalio views it as a material vulnerability for a long-term store of value.
Correlation with Tech Stocks and Market Divergence
Dalio has previously acknowledged Bitcoin’s characteristics as “hard money” due to its fixed supply. However, he has consistently noted its “pretty high correlation with tech stocks,” which undermines its value as a non-correlated hedge. This correlation was starkly illustrated in the market movements following his July 2021 comments.
In July, Dalio suggested a strategic portfolio allocation of 15% into either Bitcoin or gold to optimize the “best return-to-risk ratio” amid his concerns about U.S. debt and currency debasement. Between July and early October 2021, both assets rallied. However, after a broad crypto market crash in October 2021 that erased nearly $20 billion in leveraged positions, the assets decoupled dramatically. From its October 2021 peak near $69,000, Bitcoin fell over 45% to around $68,420 (as of the article’s reference period), while gold continued its climb, rising over 30% to its own peaks.
The Changing World Order and Traditional Hedges
Dalio’s skepticism of Bitcoin is part of a broader macroeconomic thesis. Last month, he warned investors that the post-World War II “World Order,” dominated by the United States, has “broken down.” He argues that rising geopolitical conflict and economic disorder require a reevaluation of wealth preservation strategies.
In this environment, Dalio reinforces a classic position: when currencies falter and credit systems break down, tangible stores of value like gold outperform, while debt assets become vulnerable. His view, detailed in his book Principles for Dealing with the Changing World Order, is that internal and external conflicts typically drive capital toward non-credit assets, with gold having a multi-millennia track record in this role.
While Dalio recognizes the innovative appeal of Bitcoin, his core critique is that it lacks the institutional adoption, historical precedent, and physicality that underpin gold’s status. For investors, his stance serves as a reminder to critically assess the foundational properties—beyond scarcity—that define a durable store of value.
Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph’s Editorial Policy and aims to provide accurate and timely information. Readers are encouraged to verify information independently. Read our Editorial Policy.
