on the crypto
Ray Dalio, multi-billionaire and founder of investment firm Bridgewater Associates, said that investors should not move away from traditional markets.
The multi-billionaire was interviewed at the World Economic Forum in Davos, Switzerland, where he advised investors to build a global and diversified portfolio in the current market, while increasing participation in the equity markets.
Dalio has admitted to owning Bitcoin, saying that he does not consider this resource neither a medium of exchange nor a store of value.
Cash is trash
Dalio acknowledged the widespread concerns about the global economic recession, and spoke of the liquid economy risks using the provocative slogan "cash is trash". He identifies the problem with governments' ability to print money at will, which he assumes they will be forced to do during a market downturn.
For this reason, according to Dalio, it is not recommended to switch to cash just before a possible fall in the market.
Dalio's company, Bridgewater, manages approximately $ 160 billion. This is not the first time he says investors should not be on the sidelines, as early as 2018 he said that those who hold liquidity would "feel rather stupid" for losing the rush to the market.
The billionaire encourages investors to maintain a balance in their investments, advising them to always allocate "a certain amount of gold" in their portfolios.
Bitcoin according to Ray Dalio
His position on Bitcoin (BTC) has been much more negative, and highlighting the fact that it cannot currently be used as money yet, he said: "There are two purposes to owning money, to use it as a medium of exchange or as a deposit of wealth, and Bitcoin, at the moment, is not effective in any of these cases.
“He added that Bitcoin's volatility makes it unattractive for serious investments, while a project like Libra might be a better option. Drawing on his preference for gold as a store of value, he noted that central banks are some of the largest holders of metals.
Dalio stressed that banks are currently focusing on gold as a reserve, the only safe value because it has already been tested and real, as opposed to the digital currency Bitcoin.
Bitcoin and the global economy
Bitcoin is often advertised as "digital gold", a reserve resource independent of government control. But while many believe the theses that frame Bitcoin as a safe haven, its performance so far has not indicated a significant correlation with global markets.
It appears to have a slightly positive correlation with gold, but the indices are small enough to be attributed to coincidences.
However, these may still be settling issues due to the relative novelty of cryptocurrencies.
As noted by Professor Campbell Harvey of Duke University, the sample size is still too small. Over thousands of years of history, gold has not always been a safe haven.