Institutional Perspective | Bridgewater Fund Investment Director: Bitcoin Must Meet These Three Conditions to Become Digital Gold

The Global Head of Investment Research at Bridgewater Associates, the world's largest hedge fund, Rebecca Patterson, explained in an interview with Bloomberg on Wednesday the necessary conditions for Bitcoin to become digital gold and attract institutional and corporate buyers.

Conditions for Becoming Digital Gold

When asked by the host what conditions would make Bitcoin truly digital gold, Rebecca Patterson stated that first, Bitcoin's volatility needs to decrease:

"Right now, Bitcoin can go up 10% on a tweet (referring to Musk's previous actions on Twitter). That's not a great asset haven for most institutional investors."

She further noted that Bitcoin's volatility is about ten times that of the US dollar and double that of the Venezuelan bolívar. For most institutions to allocate assets to Bitcoin, diversify their investment portfolios, and hedge risks, Bitcoin must become a less volatile and more stable asset.

Additionally, Bitcoin needs greater liquidity and regulatory certainty. The current lack of liquidity and regulatory certainty around Bitcoin is a major barrier for large institutional investors to enter the market. Patterson believes that as the regulatory ecosystem around Bitcoin and other cryptocurrencies becomes more robust, other types of investors will be more willing to participate. This will bring liquidity and reduce volatility.

Patterson emphasized:

"If I had to pick one of the above conditions that I'm most focused on, it's probably regulatory certainty around Bitcoin, and I'm not sure when that will emerge in the US."

Patterson further stated that she does not view Bitcoin as a currency, but over time, this cryptocurrency could indeed become digital gold. However, at present, many people hold Bitcoin to make more money rather than to hedge risks or as a store of value. As an institutional investor, Patterson believes that it is not yet time to enter the market.