Bitcoin Is A ‘Storehold Of Wealth’ Amidst ‘Plenty Of Liquidity & Ridiculously Low-Interest Rates,’ Says Ray Dalio
Government “outlawing Bitcoin is a good probability,” just like gold for forex controls and because they “don't want other monies to be operating or competing,” warns Bridgewater Associates founder.
Bitcoin is a storehold of wealth, says Bridgewater Associates founder Ray Dalio in an interview with Yahoo Finance’s ‘Influencers’ with Andy Serwer. But at the same time, Dalio shared his concern about cryptocurrency getting outlawed just like gold.
Talking about the current state of the market, the billionaire investor says, the way it works is “real interest rates are so bad, money's so cheap, and it's so abundant that it changes a lot of financial assets, and it causes those financial asset prices to rise.”
So, now the prices of stocks, gold, and Bitcoin are rising because the world has a lot of liquidity.
“The big thing is plenty of liquidity and ridiculously low-interest rates.”
As we have been reporting, the US 10-year Treasury yields have been on the rise since August last year, but the bigger picture is they have been on a decline since 1981.
The same has been the case for US 30-year Treasury yields. Currently at just above 2.3%, up from 1.12% in last April. Back in late 1987, it was at 9.8%.
He points out how in the '30s in the war years, cash and bonds were bad investments relative to other things. This led to the movement to those other things, and that’s when the government outlawed gold.
“That's why also outlawing Bitcoin is a good probability. And they also established foreign exchange controls because they don't want the money to go elsewhere.”
He warns that the central banks “don't want other monies to be operating or competing,” which makes it “very likely” that governments would outlaw Bitcoin “under a certain set of circumstances.”
Just like the last time, Dalio had his concerns about government intervention this time, as well, as he said they could track Bitcoin and know who’s dealing with it. “I would suspect it would be very hard to hold up against that kind of action,” he added.
However, he does see Bitcoin as digital cash and an “alternative,” which in a sense is a “storehold of wealth.” It is all because it has proved itself in the last decade and hasn’t been hacked while having built a significant following, according to him.
As for Bitcoin being in a bubble, BTC price has risen over 13x from March low, they are with imputed value, having value whatever we think it is, and not intrinsic value. Holistically, bubbles are formed when people “love” them, and Bitcoin possibly could be one he said,
“It's an alternative because there aren't many such assets. There are not so many assets that might have intrinsic value that can't be messed around.”