Multi-Billionaire Warns From Holding Bitcoin But Urges Diversified Investments

Multi-Billionaire Warns From Holding Bitcoin But Urges Diversified Investments

Ray Dalio, a billionaire most well-known as the founder of investment firm Bridgewater Associates, is warning from holding Bitcoin. At the same time, however, Dalio is urging investors to hold global and diversified investment portfolios.

Ray Dalio says Bitcoin “isn’t money”

This news came on January 21st, and was reported by CNBC. Moreover, CNBC reports that Dalio was advising investors against holding Bitcoin. More specifically, Dalio reportedly said that Bitcoin is “neither a medium of exchange nor a store of value”.

These comments came during an interview at the World Economic Forum in Davos, Switzerland. At the event, Dalio was adamant that investors need to diversify their portfolios. 

This is a stance held by many pro-crypto actors as well, however, it seems that Dalio does not share their preference for Bitcoin. Instead, Dalio supposedly said that investors should instead seek to increase their stock market stakes.

Nevertheless, this anti-crypto sentiment becomes particularly intriguing seeing as Dalio also said that “cash is trash”. Speaking about recent recession concerns, Dalio criticized fiat currencies – seeing as governments can print these at will.

Furthermore, this is something that many fear that governments will resort to during a market downturn. Recently, the issue of quantitative easing – a controversial large-scale money printing scheme to cushion the economy – has been in the news.

In keeping with this these comments, Dalio said that it would be ill-advised to invest in fiat cash just before a potential market drop. Moreover, the multi-billionaire also said that investors should seek to balance their portfolios, and “hold a certain amount of gold” as well. 

Dalio’s arguments are similar to those of Bitcoin supporters

Paradoxically, this is all something that echoes many cryptocurrency investors’ arguments. With that said, however, Dalio did not complement Bitcoin. Instead, he said that Bitcoin is currently not functioning as an effective currency.

“There’s two purposes of money, a medium of exchange and a store hold of wealth, and Bitcoin is not effective in either of those cases now.”

In addition to this, Dalio also said that Bitcoin’s volatility deters investors. Nonetheless, he did say that a stablecoin such as Libra could, instead, be a better option for investors. Dalio also once again came back to the issue of gold. His reasoning was that central banks will need to hold precious metals, such as gold, to ensure the value of the reserves.

“What are they going to hold as reserves? What has been tried and true? Are they going to hold Bitcoin digital cash… They’re going to hold gold. That is a reserve currency.”

The view that a currency needs to have an innate “value”, such as gold, has been disproven ever since the majority of the world left the gold standard. It will be interesting to see how well Dalio’s comments hold up under the coming years.