The World Economic Forum (WEF) meeting in Davos, Switzerland, which started May 22 and ends May 26, dominated the news this week. Ray Dalio, the founder of Bridgewater Associates, spoke at the event about the current state of the economy, the Federal Reserve, treasury, and cryptocurrencies.
Ray Dalio talks about cryptocurrencies
Dalio previously commented on the future of money in February, predicting that cryptocurrency would be “banned, probably by different governments.” Dalio is currently in Davos, Switzerland, where he meets with world leaders, economists and financial giants. In an interview with CNBC’s Andrew Ross Sorkin on Squawk Box, the Bridgewater Associates founder spoke at length about different parts of the economy.
Dalio again spoke about the future of money and the Federal Reserve’s upcoming monetary policies. The hedge fund manager believes the Fed has no choice but to sell. “The Federal Reserve will sell, individuals will sell, foreigners will sell, and the United States government will sell because it needs to finance its deficit,” according to an excerpt from Dalio’s interview. “There will be a supply/demand problem, which will lead to compression,” he continued.
Dalio’s view is pessimistic, and he’s not alone in Davos at the World Economic Forum who thinks the global economy is under siege. Reuters correspondent Dan Burns highlighted specific risks such as the Ukraine-Russia war, Covid-19 and food shortages when reporting on the multi-day WEF meeting.
At the WEF event, the founder of Bridgewater Associates said silver is currently trash. “Of course, money is always trash,” Dalio told a CNBC reporter. The hedge fund executive asked, “Do you know how fast you’re losing cash purchasing power?” Dalio went on to explain what he meant when he said cash was trash.
“When I say cash is trash,” Dalio clarified, “I mean all currencies against the euro, against the yen.” “All of these currencies, like those of the 1930s, are going to depreciate against goods and services.” Dalio discussed cryptocurrencies as a type of digital gold in Davos, in addition to discussing currencies and currency.
“Cryptocurrencies in particular – I think blockchain is awesome,” Dalio told CNBC’s Squawk Box host. “But let’s call it digital gold. I think a digital gold, which would be a kind of bitcoin, is something that – probably in the interest of diversification to find an alternative to gold – has a small place relative to gold and then by relative to other assets.
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Dalio: Bitcoin is a tiny percentage of my portfolio
Dalio also mentioned during the interview that he has a small investment in Bitcoin. Although Dalio has not disclosed the amount of his Bitcoin holdings, he has previously advocated investing up to 2% of his portfolio in Bitcoin.
He reiterated that Bitcoin has made tremendous progress over the past 11 years, but stressed the importance of diversity.
Dalio is far from a Bitcoin cheerleader, but his perspective on cryptocurrencies has changed significantly since Davos 2020, which happened just before the pandemic. The famous investor maintained at the time that Bitcoin was not money since it did not serve as a store of value or a medium of exchange.
His crypto rhetoric has softened over time. Dalio said last May that he had finally made a small personal investment in Bitcoin.
Total crypto market cap stands at $1.2 Trillion. Source: TradingView
He clarified that he prefers gold to Bitcoin because of the latter’s track record.
According to Dalio, we are currently in a period where people are experimenting with new forms of money. All currencies, he says, will depreciate in proportion to goods and services.
While Dalio has personally invested in bitcoin (BTC) since May 2021, four sources told crypto journalists Danny Nelson and Ian Allison in March 2021 that Bridgewater Associates would use a “small slice of their fund deployed directly into digital assets.” In the same month, the billionaire investor and hedge fund manager told the world that he believed governments would impose taxes on cryptocurrencies that would be “more shocking than expected”.
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Featured image from Getty images , chart from TradingView.com
