In a recent interview, Bridgewater founder Ray Dalio shared his views on the current Federal Reserve (FED) decision to raise interest rates by 25 basis points (bps) and the performance of Bitcoin (BTC) over the past few years.
Speaking to CNBC, Dalio stated that what the crypto industry and Bitcoin have done over the past 12 years has been “amazing.” However, the hedge fund manager believes Bitcoin has “no relationship to anything.” For Dalio, Bitcoin is a “tiny” thing that gets “disproportionate attention.”
The price of Bitcoin moves on its own, while the value of Bitcoin is less than a third of the importance of Microsoft stock, Dalio said. For the Bridgewater hedge fund founder, there are more exciting assets in terms of value and storage of wealth.
There are a lot of other industries that are more interesting to Dalio than Bitcoin and the cryptocurrency market, like biotech and the stock market. Cryptocurrency’s not an effective medium of exchange for him, and he speculates that it won’t be sufficient money in the future.
Commenting on the recent decisions by the FED and the tightening of monetary policy that it is implementing to control inflation, Dalio says that in “the world we live in, money, as we know, is in jeopardy.”
Dalio’s View On The Future Store Of Wealth
For Dalio, the importance of a store of wealth is the key to future macroeconomic recessions. He suggests that every economic crisis is a cycle, but “Bitcoin is not the solution.” In addition, Dalio claims that stablecoins are not the solution to future problems, as he suggests that they will turn back into fiat currency. He warns:
(…) I think that what you really would, what would be best is an inflation linked coin. In other words, something where basically you would say okay, this is going to give me buying power because every individual wants, what do they want? They want to secure their buying power, if you want to save.
In that sense, Dalio assures that industries will see the development of new currencies never seen before, which will be attractive for investment and storing wealth. He emphasized that Bitcoin will remain “unfit” for this task in the future.
Bitcoin Reacts To The FED Announcement
After the beginning of 2023, Bitcoin’s bullish trend, and the recent favorable economic measures by the Federal Reserve, the market has adopted a new sentiment.
After long months of consolidation and sideways price action, sentiment and macroeconomic conditions seem to be turning in favor of the bulls, with the opportunity to set the trend for the rest of 2023.
Bitcoin has grown almost 41% in the last 30 days and aims to reach new yearly highs this month. The flagship cryptocurrency is trading at $23,500 at press time, and it’s down 1.1% in the last 24 hours, reaching as high as $24,300 after the FED raised interest rates.
Cover image from Unsplash, chart from Tradingview