Bridgewater Associates founder Ray Dalio has offered a cautious assessment of Bitcoin's role in the global financial system in a recent interview. While acknowledging that Bitcoin serves as a form of currency for some investors, he pointed out its scale is far smaller than traditional reserve assets like gold. Dalio recommended that investors allocate 5% to 15% of their portfolios to gold within a diversified investment strategy. "If you don't have a view on the markets, that's how much gold you should own," he stated. He further added that central banks should hold a higher proportion of gold than they currently do. Dalio revealed that his own strategy involves reducing bond allocations, increasing gold holdings, and maintaining an "above-normal" level of gold.
Speaking at the World Economic Forum in Davos, Dalio said, "We can judge the scale of a currency by the size of Bitcoin. For some people, it is money. But its scale is not large. It is not held by central banks, and so on." Dalio's remarks come amid a broad market discussion about the shifting nature of money and wealth storage. He emphasized that as major central banks and sovereign wealth funds gradually reduce their reliance on US dollar-denominated debt, they are increasingly turning to gold rather than digital currencies.
Dalio noted that "what is money" has become a hot topic, with debates focusing on whether money is Bitcoin, digital currency, or traditional stores of value. Although Dalio did not entirely dismiss Bitcoin, his portfolio recommendations focus on other assets. For his personal investment strategy, he said he has always been "tilted towards gold" rather than cryptocurrencies. The legendary investor framed the discussion within the context of what he describes as a breakdown of the monetary order, where fiat currencies and debt are losing their appeal as stores of wealth among global central banks.
In this environment, Dalio believes hard assets like gold remain the preferred safe-haven assets for institutional investors, effectively positioning Bitcoin as a smaller, more speculative alternative. Dalio declared that the global monetary order is disintegrating, pointing to a fundamental shift in how people view fiat currencies and debt as reliable stores of wealth. "The monetary order is breaking down. By monetary order, I mean that fiat currencies and debt, as stores of wealth, are not being held by the major central banks the way they were before," Dalio said.
Dalio cited gold's superior performance as primary evidence of this shift, noting that the precious metal even outperformed tech stocks last year. "The most volatile market last year was the gold market, far more than the tech market," he explained. Global central banks and sovereign wealth funds are increasingly buying gold as a diversification tool, viewing it not as a speculative metal but as what Dalio termed the "second reserve currency."
The billionaire investor emphasized that parties holding US dollar debt and the US government itself are growing increasingly wary of each other, creating a dangerous situation. Despite acknowledging gold's significant price appreciation, Dalio remains bullish on its prospects. "If I look at the rise in the gold price and analyze the positions of the institutions that should hold gold positions, they are still short gold," he explained. He also expressed optimism about technological innovation, stating he hopes to allocate part of his portfolio to "new technology that can be massively disruptive," while continuing to hold gold as a key diversification tool.
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