Ray Dalio is one of the most prominent voices on Wall Street. Head of Bridgewater Associates, the world's most valuable hedge fund, when Dalio talks, the world of finance listens.
Dalio has views on pretty much everything, including Bitcoin. And while he used to be one of Wall Street's most ardent Bitcoin critics, the billionaire is now signing the asset's praises.
Dalio's Interesting Journey to Becoming a Bitcoin Bull
Earlier this month, Dalio sat down for an interview with MarketWatch. The discussion revolved around his latest publication, "Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail." In it, Dalio opened up on his opinions surrounding the tense economic battle between the United States and China and the role he believes Bitcoin will play for many investors.
Speaking on Bitcoin, Dalio called the currency an "amazing accomplishment" that has stood the test of time. The billionaire explained his admiration for Bitcoin's staying power over the past 13 years, its freedom from hacking issues, and its ability to reach mass adoption year after year.
Dalio even pointed out that he owns some Bitcoin and Ether. He failed to disclose how much he earns, though he explained his crypto investments represent a small part of his portfolio. He attributes his ownership of cryptocurrencies to his desire to diversify and believes that several large coins could see more upside.
A Long Road to Get Here
Dalio's praise for Bitcoin is somewhat recent. The billionaire has criticized the leading cryptocurrency on many occasions. In November 2020, he said the asset was too volatile to be a suitable currency.
At the time, Dalio claimed Bitcoin would never serve as a proper store of value or medium of exchange. The billionaire also asserted that governments could easily ban cryptocurrencies once they see them as threats to their fiat currencies.
While he admitted he could be "missing something," his opinions were primarily bearish.
More recently, however, it's been a parade of praises for crypto. In May, Dalio explained he would rather hold Bitcoin than government bonds amid the economic recovery from the coronavirus pandemic. Speaking on why Bitcoin is a better investment than bonds, Dalio said:
"The more we create savings in [Bitcoin], the more you might say, 'I'd rather have Bitcoin than the bond.' Personally, I'd rather have Bitcoin than a bond."
Still, despite the benefits of saving and investing in Bitcoin, Dalio claims the asset's success remains its biggest risk. He predicts that Bitcoin's rising popularity could become the catalyst for a massive government crackdown on the crypto sector.
Dalio reiterated his concerns that governments could ban digital assets when they deem them fit as there is still no uniform regulatory scheme for cryptocurrencies.
Gold Still Tips Bitcoin for Dalio
While Dalio is now a crypto fan, he remains committed to other asset classes. Back in August, the hedge fund manager told CNBC he's more a fan of gold than Bitcoin.
Dalio has been a long-term gold bull, with Bridgewater Associates pouring over $400 million into the asset in the second quarter of 2020 alone. Dalio explained to CNBC that gold is the best alternative asset to act as a store of value, acting as a natural hedge against inflation. Central banks hold up to 20 percent of all gold ever mined, making gold a government-backed asset with massive upside.
Regardless, Dalio continues to preach the gospel of diversification, adding Bitcoin and Ether to his portfolio.
It's not uncommon for hedge fund managers and Wall Street titans to pick gold over Bitcoin when discussing alternative assets. They understand gold's track record and consistent returns.
When you consider Bitcoin's young age and volatility, it's easy to see why gold is still so appealing to these investors. But these same factors also suggest a bright future for Bitcoin.
In just 13 years, Bitcoin is getting comparisons to gold and other large assets. That in itself is an accomplishment that can't be understated.