What You Need to Know
- Market shares are roughly $5 trillion for gold and about $1 trillion for Bitcoin, according to Dalio.
- He says Bitcoin’s market share is limited given the cryptocurrency's volatility and other attributes.
- Dalio says he plans to work only another year or two before retiring.
Ray Dalio, the billionaire hedge fund manager, takes issue with Ark Investment Management CEO Cathie Wood’s forecast that the price of Bitcoin will rise tenfold to around $500,000 five years from now.
“That doesn’t make sense to me,” said Dalio, who was interviewed by New York Times columnist and CNBC co-anchor Andrew Ross Sorkin at this week’s SALT conference in New York.
“There’s a certain amount of reflation, a certain amount of those kinds of things going on to make a price increase,” explained Dalio, the founder of Bridgewater Associates. “Then there’s a certain market share that gold will have, that Bitcoin will have.”
Those market shares are roughly $5 trillion for gold, excluding central bank holdings and jewelry, compared with about $1 trillion for Bitcoin, according to Dalio.
“Given its volatility and total attributes, I don’t imagine that the market share [of Bitcoin] will be much greater,” Dalio said. For Bitcoin’s price to increase as Wood has forecast, its market share would have to be greater than the total amount of money held in non-fiat currencies. That “seems like a stretch too far,” said Dalio, adding that it could happen, however, if there were a problem with fiat currencies.
He advised investors to “pay attention to those non-fiat currencies” and those things that can be taken from one place to another and are accepted around the world and are not debt. “That category is a more interesting conversation. Do you have a diversified portfolio of those things? And what is a good balance? That’s the more interesting question.”
Dalio owns both Bitcoin and gold, but more gold than Bitcoin.
The Changing World Order
Dalio described a changing world order that increases the allure of alternative assets and stocks: near-zero interest rates, large wealth gaps, China’s growing challenge to the U.S. dominance and bad finances — when spending exceeds earnings, so liabilities exceed assets.