Bitcoin transparency was once considered one of its greatest assets. Today, says Ray Dalio, that may be the very reason why central banks won’t adopt it as a reserve asset, even though corporations and institutional investors have embraced it.
The billionaire hedge fund manager, who is also a Bitcoin investor, said on X that “Bitcoin lacks privacy. Transactions can be monitored and potentially controlled, which is why central banks do not seek to hold it. »
Ray Dalio has previously stated that he allocates around 1% of his portfolio to bitcoin.
Bitcoin, the world’s largest blockchain network, operates as a decentralized peer-to-peer system built on a public ledger. Each transaction is permanently recorded on this transparent register, allowing everyone to consult it in real time.
Anyone can open a Bitcoin block explorer, enter a wallet address into the search bar, and view the full transaction history associated with it. Although wallet addresses are pseudonymous rather than directly linked to identities, blockchain analytics companies and law enforcement agencies can often trace fund movements and link activity to individuals or institutions.
In other words, the flow of BTC, the blockchain’s native token, is highly transparent and traceable, even if it is not always directly linked to real-world identities.
This level of transparency, often praised by Bitcoin supporters, may also be what keeps central banks away. Imagine being a central bank and accumulating an asset whose flows can be tracked in real time on a public ledger.
The lack of confidentiality also worries large institutional players. At the Hong Kong Consensus in February, participants noted that mass adoption of blockchain technology at the institutional level may ultimately depend on stronger privacy features, particularly for large transactions.
The market appears to be aligning with the growing consensus of privacy experts. For example, the privacy-focused coin zcash (ZEC) has surged more than 800% since the start of 2025. Bitcoin, meanwhile, is down more than 10%.
Correlated with actions
Dalio’s concerns extend beyond adoption by central banks, however. He pointed to structural issues that limit bitcoin’s appeal as a reserve asset compared to traditional alternatives like gold.
One is its tendency to take inspiration from Wall Street, particularly tech stocks, rather than acting as an independent store of value during times of stress.
At the time of writing, the 90-day correlation coefficient between Bitcoin and Nasdaq, Wall Street’s technology index, was 0.89, according to data source TradingView. This translates to an R² of 0.79, meaning that approximately 79% of Bitcoin’s price movements can be explained by its relationship with the Nasdaq over the course of 90 days. The data highlights BTC’s behavior more like a risk asset than an independent store of value.
The other issue Dalio highlights is the scale and structure of the market. Unlike gold, which is deeply established, widely held, and exists outside of any single digital system, bitcoin remains a relatively small and more easily influenced market. According to him, these factors further weaken its position as a global reserve asset, despite growing institutional participation.
“Ultimately, gold is more widely held, more deeply entrenched and still plays a central role in the global system,” he said.
Dalio has repeatedly favored gold over Bitcoin, and his views have been contradicted by crypto industry experts.
