- Ray Dalio tweeted on Tuesday he “might be missing something about bitcoin,” and that he sees a handful of reasons why it can’t serve as an effective currency.
- Bitcoin’s wild volatility diminishes its use as a medium of exchange and as a store of wealth, the billionaire hedge fund manager said.
- Even if the cryptocurrency becomes successful enough to compete with central banks’ currencies, governments will ban bitcoin and “make it too dangerous to use,” he added.
- Bitcoin traded above $17,000 for the first time in three years on Tuesday as its fall rally surged on.
- Watch bitcoin trade live here.
Billionaire investor Ray Dalio admitted on Tuesday he “might be missing something about bitcoin,” and still sees plenty of reasons why it can’t serve as a reliable currency.
The world’s most popular cryptocurrency ripped above $17,000 to a three-year high on Tuesday as its fall rally continued. Bitcoin began surging higher in October after PayPal announced it will allow users to buy, sell, and hold the token. Crypto bulls cheered other firms’ adoption of the digital currency, but Dalio remains skeptical bitcoin can serve such a purpose.
For one, bitcoin is “too volatile for merchants to use,” the Bridgewater Associates founder said in a tweet.
The token also isn’t “very good as a store-hold of wealth because it’s volatility is great and has little correlation with the prices of what I need to buy,” he said. Owning bitcoin does nothing to protect buying power, Dalio added.
Even if bitcoin becomes successful enough to replace central bank currencies, governments will likely ban the cryptocurrency “and make it too dangerous to use,” Dalio tweeted. Central banks including the Federal Reserve are researching the possibilities of a central bank-issued digital currency, but the decentralized nature of bitcoin and other cryptocurrencies has long been critiqued as an easy way to fund illegal activities.
Dalio also doubts that central banks, institutional investors, businesses, or multinational corporations would ever buy large amounts of bitcoin to hold as a reserve asset.
Still, the billionaire investor told his roughly 515,600 followers that, if he’s “wrong about these things,” he’s open to being corrected.
Bitcoin traded at $17,797.48 as of 12:55 p.m. ET Tuesday, up 146% year-to-date.
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