Ray Dalio Changes his Mind on Bitcoin

(Last Updated on February 8, 2021)

Ray Dalio has long been a trusted voice in macro economics and believed to be a “well grounded” investment analyst.

An absolute self made legend coming out of the 80’s and 90’s to grow to the 5th largest investment fund in the United States.

Not bad for starting out in a small NYC apartment.

He has amassed a huge following of older generation investors, boomers and such, that are not the type to dive into De-Fi head first.. They can barely get their heads wrapped around Bitcoin being a digital gold. Surely it will be a giant leap of faith for some of the oldest generation investors to buy Bitcoin, but strong conservative voices like Ray switching over might be all it takes.

For years he has been skeptical of Bitcoin and has refused to take it seriously.

Slowly, he has seen evolved his opinion and ideas allowing education and time to change his mind. It takes some depth of research and patience to make yourself familiar enough with Bitcoin and it’s blockchain technology to be confident and invest. Even as of November 2020 he was still pushing old, old, narratives about volatility and purchasing difficulty.

Ray Dalio listed his problems with “Bitcoin as an effective currency” last November

  1. Too volatile for medium of exchange and difficult to buy things with
  2. Poor store of value as volatility is great and does not protect purchasing power
  3. If it becomes successful enough to compete with government power than they will bring the BAN hammer and regulate or even outlaw Bitcoin
  4. Unlike gold, he cannot imagine big institutional investors, businesses, and multinational companies using it
  5. Too dangerous to use due to these reasons

That was in November of 2020 and I cannot believe he was still hanging in there with these old takes at that time… But he was focused on returning to the 2019 economy and years before.. Still pushing the narrative of vaccines and a booming economy come early 2021.

Now we have seen that is not what is in the cards for us.

Day after day we see more corruption and government scandals breaking all around us.

Left, right, center, it does not matter what political class you are – but what FINANCIAL class you are. The fraudster bankers and corporate lobbying cronies that have ran this country for generations aren’t going to let go easily. More shutdowns, more restrictions, and more entries to barrier for new businesses and growing companies.

The elite class doesn’t give a F*K about you, your hard work, your savings, or your health.

They will print bailouts for the same hedge funds that just shutoff MILLIONS of trader accounts across the U.S. and purposefully crashed $GME, $AMC, $NOK, and more.

Bitcoin gives a bit of relief from that power and government overreach.

It is all lies down the financial economy rabbit hole of the U.S. Govt, Federal Reserve, and Bankers, scammers, all of them. And even conservative, well known and widely reputable Ray Dalio is coming around. Realizing there is a need for a digital gold 2.0 – an advanced monetary format of that old, shiny rock that is faster, more accessible, trustless, and decentralized.

Bitcoin is better than a digital gold 2.0.

He sees the need clearly due to how visible the cracks of our U.S. corrupt financial system have become with the recent events since COVID-19.

Some of the best quotes from Ray’s post on “What I Really Think of Bitcoin”:

Bitcoin has proven itself in a time where it is needed most:

I believe Bitcoin is one hell of an invention. To have invented a new type of money via a system that is programmed into a computer and that has worked for around 10 years and is rapidly gaining popularity as both a type of money and a storehold of wealth is an amazing accomplishment. That, like creating the existing credit-based monetary system, is of course a type of alchemy—i.e., making money out of little or nothing. It, like the making of credit that made bankers rich starting with the Medicis around 1350, is making its inventors and those who got in on it early very rich and has the potential to make many more people very rich and to disrupt the existing monetary system. Those who have built it and supported the dream of making this new kind of money a reality have done a fabulous job of sustaining that dream and moving Bitcoin (by which I mean it and its analogous competitors) into being an alternative gold-like asset.”

His take on Bitcoin blossoming into a store of value for all i.e. Digital Gold 2.0:

There aren’t many alternative gold-like assets at this time of rising need for them (because of all the debt and money creations that are underway and will happen in the future). Because of what is going on in the world, besides there being a growing need for money or store hold of wealth assets that are limited in supply, there is also a growing need for assets that can be privately held. Because there aren’t many of these gold-like store hold of wealth assets that can be held in privacy and because the sizes of their markets are relatively small, there exists the possibility that Bitcoin and its competitors can fill that growing need. It seems to me that Bitcoin has succeeded in crossing the line from being a highly speculative idea that could well not be around in short order to probably being around and probably having some value in the future.”

His take on Government regulation, privacy, and the threat of Bitcoin vs. the world monetary systems today:

“As an extension of Bitcoin being digital are the questions of how private it is and what the government will allow and not allow it to be. Regarding privacy, it appears that Bitcoin will unlikely be as private as some people surmise. It is, after all, a public ledger and a material amount of Bitcoin is held in a non-private manner. If the government (and perhaps hackers) want to see who has what, I doubt that privacy could be protected. Also, it appears to me that if the government wanted to get rid of its use, most of those who are using it wouldn’t be able to use it so the demand for it would plunge. Rather than it being far-fetched that the government would invade the privacy and/or prevent the use of Bitcoin (and its competitors) it seems to me that the more successful it is the more likely these possibilities would be. Starting with the formation of the first central bank (the Bank of England in 1694), for good logical reasons governments wanted control over money and they protected their abilities to have the only monies and credit within their borders. When I a) put myself in the shoes of government officials, b) see their actions, and c) hear what they say, it is hard for me to imagine that they would allow Bitcoin (or gold) to be an obviously better choice than the money and credit that they are producing. I suspect that Bitcoin’s biggest risk is being successful, because if it’s successful, the government will try to kill it and they have a lot of power to succeed.

Who is Ray Dalio?

A legend in the financial world and one of the few to properly call out the 2008 financial crisis before it happened.

Ray Dalio created one of the largest investing firms in the U.S. today out of his New York 2 bedroom apartment in the 70’s. This guy is the real deal and an absolute legend in the financial world.

His book, “Principles for Navigating Big Debt Crises” was some of the first public research on how the mortgage and banking crisis unfolded. He pointed out a lot of problems with financial integrity, client trust, and leverage being abused within the mortgage banking world. Setting up a huge crisis from subprime loans and junk operations that were eating the system whole in a giant bubble.. POOF.

Some of his strongest investment advice summarized quickly would be:

-> Do not get caught in the short-term, emotional cycles. Making big calls and taking large positions in short time frames is asking for punishment by the market. Low time preference is best. Bitcoin excels at this..

-> Be patient and manage risk well. Do not get caught over leveraged and over exuberant – invest capital with a risk strategy dependent on liquidity needs, total capital, and time frames for investment.

-> Diversify. Increase your knowledge base and exposure throughout the market. Make smart investments backed by your own time and research, there is no substitute.

Leave a Comment

Your email address will not be published.