In his latest Reddit Ask-Me-Anything (AMA) session, the founder of the world’s largest hedge fund Bridgewater Associate, Ray Dalio, touched upon Bitcoin, in which there have been tons of questions.
“I think that bitcoin (and some other digital currencies) have over the last ten years established themselves as interesting gold-like asset alternatives,” replied Dalio to a question whether Bitcoin is a potential answer to the issue that the global new world fiat monetary system has become because of central bank money printing which in turn has increased inequality in the US. According to Dalio, Bitcoin has both,
“similarities and differences to gold and other limited-supply, mobile (unlike real estate) storeholds of wealth.”
Talking about Bitcoin relative to gold, Dalio has a strong preference for the asset that central banks will want to hold or use in exchanging value while transacting.
However, the thing is, an investor must diversify his investment portfolio, and Bitcoin can be one. He said,
“It could serve as a diversifier to gold and other such storehold of wealth assets.”
“The main thing is to have some of these type of assets (with limited supply, that are mobile, and that are storeholds of wealth), including stocks, in one’s portfolio and to diversify among them.”
Cash is a bad alternative
These positive remarks towards bitcoin came after Dalio said last month that he may be missing something about the digital asset and that he would “love to be corrected.”
“Looks like @RayDalio has been contemplating bitcoin. Definitely seems like he’s coming around,” commented analyst Mati Greenspan on this new development.
During the AMA, Dalio further talked about the flood of money in the market that is lifting the prices of most assets, which are distributing wealth in such a way that it is “threatening to the value of our money and credit.”
“With the amount of money out there, and cash being such a bad alternative, there’s no good reason that stocks couldn’t trade at 50x earnings,” said the hedge fund manager, which, to be honest, also holds true for Bitcoin but at a larger percentage.
“It is important to diversify well in terms of currencies and countries, as well as asset classes,” he said, adding, “I want excellent diversification at this time.”