Alternative Investments/Digital: Bitcoin Unlikely To Reach Stratospheric Heights, Says Dalio

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Ray Dalio was speaking on an interview with Lex Fridman.

Ray Dalio, chairman and co-chief investment officer of Bridgewater Associates, the world’s largest hedge fund with over $220 billion of assets under management, does not think that bitcoin could reach some of the more lofty price targets being put about, for example, $1 million. Could bitcoin at all touch those heights, Dalio was asked on an interview with Lex Fridman published Saturday. (Bitcoin.com)

“I don’t think that’s possible,” said Dalio, observing that logically, there was a limitation to where bitcoin’s price could go… “in relationship to other things like it.”

“The way I look at it is there’s a certain amount of it [bitcoin] and there is a certain amount of gold,” he explained. “I’ll use gold as a benchmark,” he added.

“If you take the amount of money that is in gold that is not used for jewelry purposes and not used by central banks — and I assume bitcoin won’t be used for jewelry purposes or central bank purposes — that amount of gold is about $5 trillion,” he explained. “So right now if you were to have a portfolio that has gold and … bitcoin, it’s worth about 20% of the value of gold.” [The current market cap of bitcoin is about $1 trillion]

“I think that 20% sounds kind of about right,” Dalio said. “If you use gold as a measure, it just makes no sense that it’s going to be used that much more.”

However, he did admit: “I really don’t know what the right answer is.”

In October, JPMorgan highlighted that institutional investors had begun to shift out of gold and into bitcoin, primarily because of the crypto’s allure as an inflation hedge. That was evident in a rally in the price of bitcoin, while that of gold fell back.

In the event of a global and sustained switch from the yellow metal into digital assets, the value of bitcoin could rise to levels that could be much more than 20% of the total value of gold.

Bitcoin evangelist Michael Saylor said recently that bitcoin was unstoppable, would replace gold, and eventually hit a price of $6 million.

Related Story: Saylor And Druckenmiller Weigh Bitcoin Versus Gold

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