Ray Dalio prefers gold to bitcoin

Billionaire investor Ray Dalio expressed his preference for gold over bitcoin during an appearance on Chris Williamson's YouTube podcast this week. While Dalio acknowledged that he owns a small amount of bitcoin, he emphasized that the cryptocurrency exhibits unpredictable price movements, leading him to favor gold as an investment.

Dalio, the founder of Bridgewater Associates, pointed out that bitcoin's market capitalization is smaller than that of large-cap companies like Microsoft. For example, on Thursday, bitcoin's market cap stood at approximately $574 billion, whereas Microsoft's was $2.27 trillion.

Dalio questioned why investors might choose bitcoin over gold, noting that gold is the third most popular reserve asset for central banks, following the US dollar and the euro, and is also ahead of the Japanese yen. He highlighted that central banks are purchasing gold, not bonds, and that gold is a "timeless and universal" asset.

While Dalio admitted to owning "a little bit of" bitcoin, he cautioned that the cryptocurrency's volatility requires careful consideration from investors. He warned that investors must be prepared for the possibility of significant price drops, such as an 80% decline, which limits the amount one can hold. Overall, Dalio stated that he doesn't think much about bitcoin.

Despite being well below its November 2021 high of $67,000, bitcoin has experienced an 80% increase this year, reaching nearly $30,000. The cryptocurrency's rally has occurred alongside expectations of a pause in Federal Reserve rate hikes and the banking disruption caused by the collapse of Silicon Valley Bank in March.

A note from Standard Chartered on Monday suggested that bitcoin's decentralized nature makes it an appealing asset during periods of financial stress. The note also predicted that bitcoin could potentially reach $100,000 by the end of 2024.