As geopolitical tensions in the Middle East escalate, the world’s largest hedge fund, Bridgewater Associates, founded by Ray Dalio, once again endorses gold and questions Bitcoin. However, market movements at the same time offer a thought-provoking response.
On Tuesday, Ray Dalio, known as the “Crocodile King,” stated on the popular podcast “All-In Podcast” that investors should no longer compare Bitcoin to gold. He listed three major issues with Bitcoin: “lack of central bank backing,” “no privacy,” and “threats from quantum computing,” reaffirming that “gold is the only true god.”
He said, “There is only one gold in this world,” and “gold is the most mature currency,” and it is also the second-largest reserve currency held by central banks worldwide.
However, the market delivered a loud slap to these experts. On the day Dalio made these remarks, gold prices plummeted by $168 to $5,128 per ounce, a 3% drop in a single day; in contrast, Bitcoin only saw a slight correction of 0.7%, remaining steady around $68,700.
Currently, the US-Iran conflict has entered its fifth day, and the market is in a state of heightened geopolitical anxiety. Dalio has long advocated that gold is the strongest shield in times of chaos, but ironically, during the most critical moments for safe-haven assets, gold’s decline has been even more severe than cryptocurrencies.
In fact, the decoupling of Bitcoin and gold is not new. From July to early October last year, their prices moved in sync until a $20 billion liquidation wave in the crypto market caused their paths to diverge.
Since the October peak, Bitcoin has fallen more than 45%, while during the same period, gold surged by up to 30%, breaking through the $5,100 level.
Looking at the market volatility during this geopolitical conflict: initially, gold prices did spike on Saturday when military strikes began, but as the conflict spread and focus shifted to concerns over oil supply disruptions, gold lost all gains. Meanwhile, Bitcoin, which experienced panic selling on Saturday, rebounded strongly after the death of Iran’s Supreme Leader Khamenei was announced on Sunday.
This series of intense fluctuations confirms a harsh reality: no asset can perfectly serve as a “safe haven” this time. Both assets faced significant volatility, but Bitcoin’s swings were relatively smaller.
Honestly, Dalio’s skepticism of cryptocurrencies is nothing new. He repeatedly emphasizes Bitcoin’s “transparency” issues, pointing out that “every transaction can be monitored, and possibly manipulated.” He highly doubts how central banks could accumulate large amounts of an asset that operates on a public ledger; at the same time, he again highlights quantum computing as a long-term existential threat to Bitcoin.
However, Dalio is not entirely bearish on Bitcoin. For diversification, he still holds about 1% of Bitcoin in his personal portfolio; he even boldly suggested last July that, given the growing US debt crisis, investors should allocate 15% of their funds to Bitcoin or gold, calling it the “best risk-reward” choice.
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