Ray Dalio, the legend of the billionaire hedge funds, doesn’t believe that digital currencies like Bitcoin (BTC) will succeed as others believe. Expect authorities to restrict cryptocurrencies when they see “material” growth.
Meanwhile, BTC has significantly outperformed Bridgewater so far this year. Barry Silbert, CEO of Grayscale, a crypto investment firm with more than $ 9 billion in assets under management, said::
“YTD Yield: Bridgewater Pure Alpha II Fund: -18% Bitcoin: + 115%.”
Of course, Bitcoin and Bridgewater cannot be compared directly. The first is a decentralized digital currency with a market capitalization of $ 291 billion. The second is a hedge fund that has $ 148 billion in assets under management as of September 2020.
But still, The contrast in performance shows that Bitcoin has a much greater risk-return potential, especially since its market capitalization is only 2.36% of gold today.
Other billionaire investors are showing an appetite for Bitcoin
Finally, Dalio’s skepticism towards digital currencies is based on the regulatory threat posed by cryptocurrencies.
According to Dalio, if cryptocurrencies grow significantly, governments are likely to step up efforts to restrict them. although it has not been determined at which BTC price threshold governments will take direct action. He also said:
“I don’t think digital currencies are as successful as people expect.”
Dalio’s skepticism was also shared by government officials. US President Donald Trump issued a statement on Bitcoin in July 2019. At the time he wrote on Twitter:
“I’m not a fan of Bitcoin and other cryptocurrencies that are not money and whose value is very volatile and based on air.”
Former President of the United States, Barack Obama described Bitcoin as a “Swiss bank account,” indicating that nation states will not be able to ban something that is not only global but can be easily secured by individuals..
Speaking about cryptocurrencies at the South by Southwest Festival in 2016, Former President Barak Obama said:
“Everyone walks around with a Swiss bank account in their pockets.”
Bitcoin is at its core a peer-to-peer software protocol. Governments could restrict the use of cryptocurrencies by banning cryptocurrency entry and exit ramps. But This would simply make anti money laundering (AML) initiatives less practical as users would simply go underground or move to friendlier jurisdictions.
Furthermore, As cryptocurrencies hit the gray market and people start trading crypto assets on a peer-to-peer basis, it will become more difficult to combat illegal activity.
As such, it can be argued that It is not in the best interests of governments to ban Bitcoin entirely.
Furthermore, In the past few months, more billionaires have started supporting Bitcoin. As Cointelegraph reported, The frenzy of Bitcoin between institutions and smart money comes from the qualities that make it an efficient, but perhaps more important, business of distinctive value.
Bitcoin is fluid, decentralized, easy to trade, transfer and store securely. These features allow it to act as a convenient safe haven and hedge against inflation with a low barrier to entry.
As he showed Julien Bouteloup, DeFi developer, Dalio has shown skepticism about Bitcoin in the past. Before BTC hit an all-time high of around $ 20,000 in 2017, Dalio described BTC as a bubble.
At the moment, Dalio is not convinced
During his interview with Yahoo Finance Dalio also stressed that he would not prefer Bitcoin to gold.
But still, Throughout 2020, BTC also massively outperformed gold despite Bitcoin’s sharp 60% drop in March.
So far this year gold has gained around 23%. Over the same period, BTC saw a 119% increasefrom $ 7,165 to more than $ 15,700.
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