Billionaire Ray Dalio, who founded the world’s largest hedge fund, disclosed at a conference Monday that he owns “some” bitcoin and called the cryptocurrency a better inflation hedge than bonds—marking a notable pivot for the longtime bitcoin skeptic as the market rebounds from a $1.3 trillion crash after climbing 10-fold and adding nearly $2.4 trillion in value over the past year.
Speaking at CoinDesk’s annual Consensus conference on Monday, 71-year-old Dalio disclosed his bitcoin investment for the first time while discussing the inflationary concerns that have fueled bitcoin’s resurgence and rattled stock markets in recent weeks.
“Personally, I’d rather have bitcoin than a bond” as an inflation hedge, Dalio said in the interview, which was pre-taped on May 7 as bitcoin prices, then about 15% below an April peak, struggled to pare back losses from a flash crash sparked by mining concerns.
“I think bitcoin’s biggest risk is its success,” he added of soaring investor demand likely spurring regulatory crackdowns, which have already started to materialize in China, crashing crypto markets by more than 50% from highs earlier this month.
As Dalio’s interview aired on Monday, the price of bitcoin was about $37,775—climbing 11% over the past 24 hours but still down more than 40% from its latest peak.
Dalio’s change of mind comes after he questioned crypto’s massive resurgence in November, tweeting: “I might be missing something about bitcoin so I’d love to be corrected,” before launching into a slew of perceived downfalls that echoed much of the bearish sentiment on Wall Street.
“Unlike gold, which is the third highest reserve assets that central banks own, I can’t imagine central banks, big institutional investors, businesses or multinational companies using [bitcoin],” Dalio tweeted at the time—just months before Goldman Sachs, Morgan Stanley and Tesla all started dabbling in the cryptocurrency.
“One of the great [risks]… is the government having the capacity to control almost any of them—bitcoin or [other] digital currencies. They know where they are, and they know what’s going on,” Dalio cautioned at the Monday conference. He had a similarly cautious tone in November, saying: “My experience with the government is they can regulate whatever they want, when they feel like it… and if [bitcoin] gets bigger and bigger, it will be regulated.”
During the pandemic, many investors—from at-home traders to institutional giants—have taken to cryptocurrencies as a legitimate hedge against longer-term inflation concerns, which have come to the fore due to stimulus packages. “These emergency measures, like the massive money-printing agenda, reduce the value of traditional currencies like the dollar,” Nigel Green, the CEO of wealth advisory deVere Group said in a recent note, echoing Dalio’s comments on Monday. Despite the rise, however, crypto’s unyielding volatility has only intensified, as evidenced by this month’s price crash and even the Monday recovery. “We go through soul searching times like this and scrape the models, and yes our conviction is just as high,” Ark Investment CEO Cathie Wood—a notable bitcoin bull—told Bloomberg TV Wednesday, before warning: “You never know how low is low when a market gets very emotional.”
What To Watch For
China’s recent crackdown measures are already starting to curtail mining activity in the nation, and Treasury Secretary Janet Yellen warned last week that President Joe Biden’s tax enforcement plan would include new cryptocurrency reporting requirements. Regulatory concerns have rocked the nascent crypto market before—and much more than the recent decline. Despite rising more than 10-fold in 2017, the combined value of the world’s cryptocurrencies crashed more than 80% within months after countries like South Korea started cracking down on then-booming initial coin offerings, which minted new tokens and fueled an investor mania not unlike the recent surge in relatively unknown altcoins.