The billionaire warns about incoming asset inflation while recommending Bitcoin and gold as he continues warming to cryptocurrency.
Bitcoin (BTC) can offer protection against the “depreciating value of money,” newly-bullish investor Ray Dalio says.
In a Reddit “Ask Me Anything” session on Dec. 8, Dalio, who last month abandoned his skepticism of Bitcoin, said that the cryptocurrency could complement gold as an investment.
Dalio: Bitcoin “could be diversifier to gold”
“I think that bitcoin (and some other digital currencies) have over the last ten years established themselves as interesting gold-like asset alternatives, with similarities and differences to gold and other limited-supply, mobile (unlike real estate) storeholds of wealth,” he wrote.
“So it could serve as a diversifier to gold and other such storehold of wealth assets.”
Dalio shed light on his opinion of various aspects of the global economy, including the current U.S. position, China and the state of fiat currency.
Continuing, he argued that money printing would spur asset inflation, implying that simply holding wealth in cash would lead to losses.
“We are in a flood of money and credit that is lifting most asset prices and distributing wealth in a way that the system that we’ve come to believe is normal is unable to, and that is threatening to the value of our money and credit,” he warned.
“Most likely that flood will not recede, so those assets will not decline when measured in the depreciating value of money. It is important to diversify well in terms of currencies and countries, as well as asset classes.”
A familiar BTC bull case
His perspective conspicuously mimics that of Bitcoin proponents, notably Michael Saylor, CEO of MicroStrategy, who is guiding the company towards BTC reserves of nearly $1 billion.
Saylor, in an interview with “The Bitcoin Standard” author Saifedean Ammous in September, stressed that asset inflation was far outstripping that of cash, and that large paper money holdings were thus akin to a “melting ice cube.”
Dalio thus departs further and further from his Bitcoin-skeptic position just weeks ago, which began to thaw when he admitted that he “may be missing something” about its true nature. Nonetheless, he stopped short of advocating a “full Bitcoin” portfolio.
“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. Not enough people do that,” he reasoned.
On the topic of gold, Dalio was more opaque. Choosing between the precious metal and Bitcoin would depend on central banks’ behavior.
“As far bitcoin relative to gold, I have a strong preference for holding those things which central banks are going to want to hold and exchange value in when they are trying to transact,” he concluded.