Dalio: Government May Ban Bitcoin, Timing Markets 'It's Harder Than Competing in the Olympics'

Abstract: Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund, has reiterated his warning that governments may ban Bitcoin. Trying to time the market is a fool's errand akin to beating Usain Bolt in a sprint race or Michael Phelps in a pool.

Ray Dalio, founder of Bridgewater Associates, the world's largest hedge fund, has reiterated his warning that governments could ban bitcoin.

In an interview with Investor's Podcast Network this week, Ray Dalio talked about Bitcoin, saying he was impressed that it hasn't been hacked and has faced only moderate market competition over the past decade. . But Dalio warned that there are “regulatory issues” surrounding Bitcoin, explaining: “When you have an alternative currency, it’s a threat to every government. Every government wants to monopolize their currency, especially if You have better money (because it doesn’t depreciate easily). Historically, they [governments] have banned gold, silver, etc., they can ban bitcoin.”

Still, Dalio admitted that he has a small amount of bitcoin in his portfolio for diversification, saying: “I am a diversification practitioner.”

Another legendary investor, Bill Miller, once suggested that people should hold about 1% to 2% of Bitcoin in their portfolios, Dalio commented: “I think that’s right.” But the 72-year-old billionaire said he does not believe Bitcoin will replace gold as some have suggested, nor that BTC can reach very high numbers like $1 million.

In contrast, Bitcoin's number one fan, Microstrategy CEO Michael Saylor, has repeatedly said that Bitcoin will replace gold. The executive also boldly predicted the price of BTC to reach $6 million.

Timing the market 'harder than competing in the Olympics'

Hawkish rhetoric from the Federal Reserve about raising interest rates as soon as March has weighed heavily on cryptocurrency markets.

Bitcoin has fallen about 11 percent since Jan. 1, from about $47,700 at the start of 2022 to an intraday low of about $42,560 on Thursday, according to data from Media Terminal. The all-time high of nearly $69,000 is down about 35%. At press time, the Crypto Fear and Greed Index has dropped to 15 – extreme fear, reaching its lowest level since July 2021.

Warren Buffett once said: "Be fearful when others are greedy, and be greedy when others are fearful". This phrase is also used by many people to invest in the crypto market, and many traders think this is a good time to add positions. Mike Novogratz, CEO of Galaxy Digital Holdings, said on CNBC's "Squawk Box" that institutional investors will start buying cryptocurrencies during the 2022 sell-off, and the recent dip is a potential buying opportunity.

However, Ray Dalio said trying to time the market is a fool's errand akin to beating Usain Bolt in a sprint race or Michael Phelps in a pool. "Don't try to time the market yourself because you can lose. Competing in the market is harder than competing in the Olympics - there are more people trying to do it and putting more chips," he said in the interview.

Ray Dalio believes that most people simply do not have the ability to predict which assets will go up and which will go down and invest accordingly, Bridgewater spends "hundreds of millions of dollars" every year to try to gain an edge, so there's a good chance that retail investors' bets will fail .

Dalio, who has always favored a diversified global approach to investing, repeated his warnings about holding cash and bonds in the interview, citing the recent surge in U.S. debt and money supply. "If you buy bonds, you lock in a negative real return, and cash is worse than that. Please don't look at your nominal return and think it's safe, when it's not safe," he said.