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The founder of the hedge fund Bridgewater Associates, Ray Dalio, stated in the All-In podcast that Bitcoin cannot be regarded as a long-term store of value or a “safe haven,” and he outlined reasons why investors should refrain from purchasing the leading cryptocurrency.
The billionaire believes that central banks still do not endorse Bitcoin. Unlike fiat currencies and gold, whose prices can be stabilized by central banks, these institutions bear no responsibility for Bitcoin’s value and have no incentive to support the primary cryptocurrency. In the event of a significant drop in Bitcoin’s price or a loss of trust in its blockchain, no organization would step in to buy assets or provide liquidity to sustain the market, according to Dalio.
Another drawback of Bitcoin is its lack of complete privacy, according to the businessman. All transactions are permanently recorded on a public blockchain, and if the identity of the address owner becomes known, anyone can trace the entire history of their transactions and current balance. Previously, the entrepreneur mentioned that central bank digital currencies (CBDCs) could also compromise the privacy of monetary transfers.
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A further vulnerability of Bitcoin is the network’s susceptibility to quantum computing. Dalio is concerned that a sufficiently powerful quantum computer could potentially calculate the private keys of crypto addresses, enabling malicious actors to steal funds. Currently, this is merely a theoretical threat; however, it could materialize in the future, raising concerns among long-term investors who plan to hold Bitcoin for many years.
The investor also disagrees with the notion that many crypto enthusiasts refer to Bitcoin as digital gold. He argues that gold cannot be a precious metal subject to speculation. Rather, true gold serves as established money and a reserve asset held by central banks. Dalio sees no compelling reasons for central banks to acquire Bitcoin and hold it over the long term.
Last year, Dalio advised investors to allocate 15% of their portfolio to Bitcoin and gold to safeguard against economic risks associated with the stock and bond markets, the devaluation of fiat currencies, and the rising national debt of the United States.
