Ray Dalio picked an interesting week to destroy Bitcoin.
The founder of Bridgewater Associates said Tuesday on the popular All-In podcast that investors should stop comparing bitcoin to gold, arguing that the largest cryptocurrency lacks central bank backing, lacks privacy and faces long-term threats from quantum computing.
“There is only one gold medal,” Dalio said. “Gold is the most established currency” and the second reserve currency held by central banks.
The timing, however, undermined the thesis. On the day Dalio made the comments, gold fell $168 to $5,128, a 3% drop, while bitcoin fell just 0.7% to $68,700. Five days after the start of the U.S.-Iran war, Dalio’s favorite asset was hit harder by the type of crisis it claims to be designed to protect against.
Decoupling is not new. Bitcoin and gold moved together from July to early October, until October’s broader crypto crash wiped out $20 billion in leveraged positions. Since then, the two assets have moved in opposite directions. Bitcoin is down more than 45% from its October high. Gold rose 30% to over $5,100 during the same period.
Gold soared during Saturday’s early strikes, then gave back those gains as the conflict widened and oil disruption became the dominant concern. Bitcoin sold off on Saturday, rebounded on Sunday following the death of Iranian Supreme Leader Khamenei, was rejected at $70,000 on Tuesday and has since stabilized around $67,000.
This shows that neither asset fully functioned as a safe haven this week. Both have been volatile. Bitcoin is simply less volatile, which is not the outcome predicted by Dalio’s framework.
Dalio’s specific criticisms aren’t new either. He highlighted the transparency of Bitcoin, noting that “any transaction can be monitored and perhaps directly controlled.” He questioned whether central banks would ever accumulate an asset recorded in a public ledger. And he discussed quantum computing as a long-term existential risk.
He’s not entirely bearish. Dalio holds about 1% of his portfolio in bitcoin for diversification purposes and recommended a 15% allocation to bitcoin or gold in July, calling it “the best risk/return ratio” given the trajectory of U.S. debt.
Dalio warned last month that the US-led “world order” had “collapsed” and that investors needed to rethink how they protect their wealth. The market is actively debating whether gold is still the only solution, and this week’s price action hasn’t made its case any easier to make.
