Hedge fund manager Ray Dalio
(Ray Dalio, co-chairman and co-CIO of Bridgewater Associates, the world’s top hedge fund)

Ray Dalio prefers Bitcoin over bonds


Hedge fund manager Ray Dalio believes Bitcoin is a better buy than government or corporate bonds. During a recent interview at CoinDesk’s Consensus 2021 conference, the co-chairman and co-CIO of Bridgewater Associates, described Bitcoin as a superior financial instrument for saving than bonds.

“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” the billionaire investor said in the interview, which was recorded on May 6 but was aired on Monday (May 24).

He also revealed he’s bought some of the cryptocurrency but didn’t say how much he owned.

Dalio has been bearish on bonds for quite some time, saying in March the fixed income instruments pay less than inflation. The economics of investing in bonds “has become stupid” he said.

While many argue that the volatility of cryptocurrencies is the biggest risk for investors, according to Dalio, bitcoin’s “greatest risk is its success.” The recently surging popularity and performance of digital assets could prompt a regulatory crackdown on the sector, therefore government oversight is the thing to watch, according to the 71 year-old American.

“One of the great […] worr[ies] is the government having the capacity to control […] Bitcoin, or the digital currencies,” Dalio said. “They know where they are, and they know what’s going on” he added.

A similar view was echoed by him in January.“ I suspect that Bitcoin’s biggest risk is being successful because if it’s successful, the government will try to kill it and they have a lot of power to succeed” he wrote in a post titled “What I Think of Bitcoin.”

“I greatly admire how Bitcoin has stood the test of 10 years of time, not only in this regard but also in how its technology has been working so well and has not been hacked. … 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 about 80% of.”

Bitcoin UDS YTD

In March,  on the podcast Influencers with Andy Serwer , Dalio warned of the possibility that the U.S. government could ban it as it did with gold during the 1930s if the cryptocurrency is posing a real threat to Treasury bonds.

In 1933, during the great depression, US President Franklin D. Roosevelt  signed Executive Order 6102 “forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States.”

A year later, the 1934 Gold Reserve Act prohibited people from holding gold and mandated the transfer to the U.S. Treasury. Gold ownership remained illegal in the US until the 1970s.

In 2017, Dalio said he is not a believer in cryptocurrencies. Read our article on investopress about it.

Looking ahead, “the world is going to change at an incredibly fast pace,” Dalio told CoinDesk. “Whoever wins the technology race, wins it all, economically, and militarily. That’s what the next five years looks like.”

Bitcoin soared some 650% over the past year. Despite news of official scrutiny that has spooked crypto investors, the world’s most popular cryptocurrency  is still up over 30% year-to-date. Bridgewater Associates,  the world’s largest hedge fund, started 2021 with $101.9 billion in assets under management and its Pure Alpha II is up 4% this year through April.