Bridgewater's Ray Dalio warns: Governments will ultimately kill Bitcoin, gold is the true store of value

Ray Dalio, founder of Bridgewater Associates, recently shared his views on cryptocurrency in an interview with Yahoo Finance. In addition to mentioning the regulatory challenges facing crypto assets, he also believes that the emergence of central bank digital currencies will further impact the adoption of cryptocurrencies.

Aside from overseeing Bridgewater Associates' $160 billion in assets, Ray Dalio is also known for his book "Principles." In the interview with Yahoo Finance, he highlighted three major pain points, suggesting that cryptocurrencies may ultimately not succeed.

Government Will Crack Down on Bitcoin

Dalio believes that even if Bitcoin eventually succeeds in adoption, the government will go to great lengths to prohibit it. He pointed out:

Assuming the importance of Bitcoin continues to grow, the government will not sit idly by. They will use all means to ban this asset, such as prohibiting Bitcoin trading and even holding Bitcoin.

Too Volatile to Serve as a Medium of Exchange

Dalio also mentioned that theoretically, Bitcoin could serve as a currency, but due to its high volatility, it cannot maintain a stable store of value. In practical use cases, it is rarely used as a medium of exchange, making its adoption a failure. He stated:

Even today, I still cannot easily shop with Bitcoin. Its volatility is too high to be a successful store of value, and the high volatility mainly stems from speculation, making it unable to be a successful store of value tool or a medium of exchange.

Central Bank Digital Currencies Will Impact Cryptocurrencies

As digital currencies become more prevalent in the future, Dalio believes that future digital fiat currencies, including digital US dollars, euros, and Chinese yuan, will replace cryptocurrencies like Bitcoin. There may even be an alternative currency similar to Bitcoin in terms of supply, demand, and store of value.

Dalio once again mentioned gold, which is often compared to Bitcoin. He stated:

Between the two, I personally prefer gold. Gold will be the preferred alternative asset for governments and central banks as legal tender. Compared to Bitcoin, central banks are more likely to hold gold.

Indeed, many heavyweight figures in traditional finance have come out in support of Bitcoin since the beginning of this year, such as Paul Tudor Jones, founder of Tudor Investment, renowned hedge fund manager Stanley Druckenmiller, and legendary fund manager Bill Miller.

They all agree on the store of value capability of gold and Bitcoin, but Bitcoin's potential for growth may far exceed that of gold in the future. However, the contrarian Dalio still believes that cryptocurrencies will not achieve success as expected by the public.