Legendary Wall Street investor Ray Dalio appears to be warming to bitcoin.
As Asia Times recently reported, the American billionaire has been skeptical of the leading crypto’s long-term potential, saying it is too volatile, fails as a transactional medium and would likely be banned in the future if its price were to rise high enough. However, he recently acknowledged that he might be “missing something” about bitcoin and he now concedes that it has potential as a store of value.
“Bitcoin could serve as a diversifier to gold, and other such store holds of wealth assets,” Dalio, founder of Bridgewater Associates, the world’s largest hedge fund, said in a Reddit AMA session on Tuesday.
He even advised investors to consider a modest allocation in their portfolios: “I think that bitcoin (and some other digital currencies) have over the last ten years established themselves as interesting gold-like asset alternatives, with similarities and differences to gold and other limited-supply, mobile (unlike real estate) store holds of wealth.”
Bitcoin is threat to gold?
The “bitcoin is digital gold” narrative is gaining so much traction in traditional investment circles that the strategists at JPMorgan now believe that institutional investors turning to the crypto as a new store of value could actually put downward pressure on the precious metal in the longer-term.
In a note issued on Tuesday, they said the leading crypto’s short-term price is “skewed to the downside,” while gold looks more positive. However, they see bitcoin as the faster horse in the race in the medium and long term.
“The adoption of bitcoin by institutional investors has only begun, while for gold its adoption by institutional investors is very advanced,” JPMorgan said. “If this medium to longer term thesis proves right, the price of gold would suffer from a structural flow headwind over the coming years.”
JPMorgan said digital asset manager Grayscale’s bitcoin trust enjoyed an inflow of nearly $2 billion over the last two months, while gold ETF outflows exceeded $7 billion.
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