Ray Dalio, the billionaire founder of Bridgewater Associates, the world’s biggest hedge fund, is calling for investors to allocate 15% of their portfolios to Bitcoin (BTC) or gold as risks mount.
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Specifically, Dalio is calling on investors to get into BTC or gold as risks grow from America’s accelerating government debt and currency devaluation. “If you were optimizing your portfolio for the best return-to-risk ratio, you would have about 15% of your money in gold or Bitcoin,” Dalio said on a podcast.
The comments mark a notable shift from his previous recommendation of just 1% to 2% of a portfolio in Bitcoin. Dalio has been raising concerns about what he calls a “debt doom loop” in the U.S. He points to a projected $12 trillion in new Treasury issuance over the next year required to service America’s $36.7 trillion national debt.
Diversifiers
A just-released U.S. Treasury report confirms the trend Dalio mentions, with the U.S. government expected to borrow $1 trillion in the current third quarter, which is $453 billion more than previously forecast. Dalio describes Bitcoin and gold as “effective diversifiers” in a scenario where fiat currencies lose value relative to hard assets.
Still, Dalio remains skeptical about Bitcoin’s role as a reserve currency, citing surveillance and transparency of the blockchain as worries. “Governments can see who is doing what transactions on it,” he said of the blockchain, adding that any code-level vulnerabilities could undermine Bitcoin’s credibility as alternative money.
While Dalio says he owns “some Bitcoin,” he framed his 15% recommendation as flexible, saying how much BTC a person owns is up to them. Bridgewater Associates is privately held. BTC is up 27% this year.
Is BTC a Buy?
Most Wall Street firms don’t offer ratings or price targets on cryptocurrencies such as Bitcoin, so we’ll look instead at its three-month performance. As one can see in the chart below, the price of BTC has risen 25.84% in the last 12 weeks.
