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Ray Dalio, the billionaire hedge fund legend, doesn’t see digital currencies like Bitcoin (BTC) being as successful as other people do. Authorities are expected to crack down on cryptocurrencies when they see “material” growth.
Meanwhile, BTC has largely outperformed Bridgewater since the start of the year. Barry Silbert, CEO of Grayscale, a cryptocurrency investment firm with over $ 9 billion in assets under management, She said:
“YTD Yield: Bridgewater Pure Alpha II Fund: -18% Bitcoin: + 115%.”
Of course, Bitcoin and Bridgewater cannot be directly compared. The first is a decentralized digital currency with a market capitalization of $ 291 billion. The latter is a hedge fund that manages $ 148 billion in assets under management as of September 2020.
However, the contrast in performance shows that Bitcoin has much more risk-reward potential, particularly as its market cap today is only 2.36% of gold.
Other billionaire investors show an appetite for Bitcoin
Ultimately, Dalio’s skepticism towards digital currencies boils down to the regulatory threat against cryptocurrencies.
If cryptocurrencies see material growth, Dalio said governments are likely to step up their efforts to limit them, although he didn’t specify at what BTC price point governments will start acting directly. He also said:
“I don’t think digital currencies will be successful in the way people hope.”
Dalio’s skepticism was also shared by government officials. US President Donald Trump released a statement regarding Bitcoin in July 2019. At the time, he tweeted:
“He is not a fan of Bitcoin and other cryptocurrencies, which are not money and whose value is highly volatile and based on nothing.”
However, former US President Barack Obama has described Bitcoin as a “Swiss bank account”, alluding to the fact that nation-states will not be able to completely ban something that is not only global but also something that can be easily. protected by individuals.
During a keynote at the South by Southwest festival in 2016, referring to cryptocurrencies, former President Barak Obama said:
“Everyone goes around with a Swiss bank account in their pocket.”
Basically, Bitcoin is a peer-to-peer software protocol. Governments could move towards limiting the use of cryptocurrencies by outlawing the entry and exit ramps in cryptocurrencies. But that would simply make anti-money laundering (AML) initiatives less practical as users will simply go underground or move to friendlier jurisdictions.
Furthermore, as cryptocurrencies move into the gray market and people start trading crypto assets in a peer-to-peer way, it becomes more difficult to crack down on illicit activities.
Therefore, it can be strongly argued that it is not in the best interest of governments to ban Bitcoin entirely.
Additionally, more billionaires have begun to show support for Bitcoin in recent months. As Cointelegraph reported, the frenzy around Bitcoin between institutions and smart money stems from its properties making it an efficient, but perhaps more importantly, non-confiscable store of value.
Bitcoin is liquid, decentralized, easy to trade, transfer and securely store. These features allow it to operate as a practical safe haven and a hedge against inflation with a low barrier to entry.
As DeFi developer Julien Bouteloup noticed, Dalio has offered skepticism towards Bitcoin in the past. In 2017, before BTC hit an all-time high of around $ 20,000, Dalio described BTC as a bubble.
For now Dalio is not convinced
During his interview with Yahoo Finance, Dalio also pointed out that he would not prefer Bitcoin to gold.
However, throughout 2020, despite Bitcoin’s sharp 60% drop in March, BTC also massively outperformed gold.
Since the beginning of the year, gold has posted gains of around 23%. Over the same period, BTC recorded a 119% gain, going from $ 7,165 to over $ 15,700.
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