Posted 6 months ago | by @devadmin
Bridgewater Associates is taking a closer look at Bitcoin and other cryptocurrency assets, according to its founder Ray Dalio a well known Wall St veteran investor who is a famous economist and founder of the world’s largest hedge fund.
“I am writing this to clarify what I think of Bitcoin,” Dalio wrote in the column Bridgewater Daily Observations — the firm’s daily newsletter. Dalio expressed that “Bitcoin is one hell of an invention,” a headline seen going around the internet today.
Dalio expressed that Bridgewater Associates was taking a look at Bitcoin and other digital assets.
“Believe me when I tell you that I and my colleagues at Bridgewater are intently focusing on alternative storehold of wealth assets and expect Bridgewater to soon offer an alt-cash fund and a storehold of wealth fund in order to better deal with the devaluation of money and credit that we consider to be a major risk and opportunity, and Bitcoin won’t escape our scrutiny,” Dalio said in his newsletter to clients today, adding that he believes that “Bitcoin is one hell of an invention,” Dailo writes.
Dalio further notes:
“Overall, it’s clear that Bitcoin has features that could make it an attractive storehold of wealth; it also has proven resilient so far. However, we have to acknowledge that this financial vehicle is only a decade old. In absolute terms and vis-a-vis established storeholds of wealth such as gold, how will this digital asset fare going forward? Future challenges may still come from quantum computing, regulatory backlash, or issues we haven’t even determined yet. Even if none of these materialize, Bitcoin, for now, feels more to us like an option on a potential storehold of wealth.”
Dalio additionally added that Bitcoin “looks like a long duration option on a highly unknown future that I could put an amount of money in that I wouldn’t mind losing 80% of.” Although, he also complimented Bitcoin and said that, “Bitcoin has been successful in overcoming its speculative nature and may have future value.”
Dalio also expressed concerns about storing Bitcoin securely against cyber attacks. He also challenged the idea that Bitcoin is a scarce asset, noting that there are many other “bitcoin-like assets,” failing to understand that Bitcoin is its own coded digital currency and the rest are alternative digital assets.
“I tell you that I and my colleagues at Bridgewater are intently focusing on alternative store-hold of wealth assets and expect Bridgewater to soon offer an alt-cash fund and a storehold of wealth fund in order to better deal with the devaluation of money and credit that we consider to be a major risk and opportunity and Bitcoin won’t escape our scrutiny.”
Researchers at Bridgewater highlighted three challenges for BTC:
- Bitcoin remains an extremely volatile asset, and its future purchasing power remains a fundamentally speculative proposition.
- Bitcoin still faces meaningful regulatory tail risks. While greater regulation might help Bitcoin gain broader institutional acceptance, it could also trigger selling by some of its largest existing owners who prioritize a lack of public oversight around the asset.
- While there have been improvements, current levels of liquidity still constitute real structural challenges to holding bitcoin for large traditional institutions such as Bridgewater and its clients.
However, the researchers expect that the infrastructure around Bitcoin and cryptocurrencies more generally will continue to evolve over time.
“In addition, the new paradigm that we are living in, with many government bonds no longer offering the same return or diversification characteristics and currencies facing greater risk of depreciation, could propel development of alternative storeholds of wealth faster than might otherwise have been the case,” they said.
Dalio previously said that he didn’t think Bitcoin would work as an everyday currency while admitting that he didn’t understand it and could be missing something. However, Dalio stepped back on his negative comments from his longstanding critique of Bitcoin last month, when he stated that cryptos like Bitcoin could be a “gold-like asset.”
Funnily enough, Max Keiser of the Keiser Report predicted that Dalio would invest in Bitcoin. In an interview with Daniela Cambone, Max Keiser said he firmly believed billionaire hedge fund manager Ray Dalio and Tesla CEO Elon Musk would soon invest in Bitcoin. Dalio hasn’t yet pulled the trigger like Paul Tudor Jones, and others, but he is expected to do so soon.
Bitcoin is currently trading at [FIAT: 34,003.25] UP +11.1% in the last 24 hours according to Coingecko at the time of this report.