Ray Dalio Is Half Right About Bitcoin And That’s the Problem
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To investors,
Ray Dalio was interviewed on the All-In Podcast earlier this week. At one point, he laid out his bear case against Bitcoin. He said:
Central banks don’t want bitcoin.
Governments can track bitcoin.
Bitcoin is a small, controlled market.
Quantum computers will crack bitcoin.
Take a listen:
I respect Dalio. He built Bridgewater into the world’s largest hedge fund. His framework for understanding debt cycles is genuinely brilliant. But his analysis of Bitcoin is stuck in 2017. He’s applying 20th-century assumptions to a 21st-century monetary network. The data and current trends tell a very different story than his narrative.
Before I explain where I disagree, and to be fair to Dalio, he does make some points that Bitcoiners should take seriously rather than dismiss:
1. Bitcoin does trade like a risk asset in the short term. In periods of liquidity stress, Bitcoin has been “sold first, asked questions later.” Its correlation with tech stocks remains elevated. Dalio’s observation that Bitcoin acts more like a “liquidity gauge” than a “fear hedge” is supported by recent price action.
2. Gold has millennia of Lindy effect. Bitcoin is 17 years old, which can feel like a long time, but gold has been a store of value for 5,000+ years. NYDIG’s analysis concedes that gold has the edge on “societal adoption and acceptance” and is “larger in total value and less volatile.” Bitcoin’s annualized volatility is still ~52% versus gold’s ~15.5%. The gap is narrowing, which is attractive to large pools of capital, but it hasn’t closed.
3. The major central banks are not buying. The Fed and ECB have explicitly said no. While smaller nations and sub-sovereign entities are adopting Bitcoin, the two institutions that anchor the global monetary system remain skeptical. Anyone who is claiming it wouldn’t matter if the Fed and ECB got involved are delusional.
4. Dalio’s debt cycle framework is correct. The U.S. deficit hit 6% of GDP. National debt is $38.5 trillion. The Fed has cut rates six times since September 2024 and resumed QE. Money supply expansion is coming. Dalio is right that this environment rewards hard assets. His error is in assuming gold is the only one that benefits.
Now with all this said, Ray Dalio is one of the great macro thinkers of our time. His debt cycle framework is essential reading and he should get much more credit than he already does. His instinct to hold non-sovereign stores of value in this environment is correct. Essentially, Ray Dalio is a hardcore bitcoiner and doesn’t even realize it yet.
His Bitcoin analysis is frozen in time. He’s arguing against the Bitcoin of 2018, which was before the ETFs, before the Strategic Bitcoin Reserve, before central banks started testing Bitcoin allocations, before BIP-360, before $95 billion in ETF AUM, before 193 public companies added it to their balance sheets, before the hashrate crossed 1 Zettahash.
The data doesn’t support “central banks don’t want Bitcoin.” The data shows a sovereign adoption curve that is accelerating. The data doesn’t support “Bitcoin can be controlled.” The data shows it’s the one asset that survived a global government crackdown in China and came back stronger. The data doesn’t support “quantum will crack it.” The data shows the threat is decades away and Bitcoin developers are already building solutions.
Dalio holds 1% of his portfolio in Bitcoin. He allocates 5-15% to gold. In ten years, he may look back and wish those numbers were reversed.
The irony is that Dalio’s own framework of debt cycles, currency debasement, and the decline of the “rules-based order” is the single best argument for Bitcoin. He just hasn’t followed his own logic to its conclusion yet.
Have a great day. I’ll talk to everyone tomorrow.
- Anthony J. Pompliano
Founder & CEO, Professional Capital Management
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Phong Le is CEO of Strategy (formerly MicroStrategy), and David Bailey is CEO & Chairman of KindlyMD. This conversation was recorded live at Bitcoin Investor Week in New York.
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Shows he may understand investing but not technology. Given point #4 about a quantum attack, it would destroy the entire economic system which runs on internet infrastructure. If bitcoin goes down, the entire banking and financial system goes down and is no longer secure. He also isn't viewing it as an AI to AI micropayment mechanism for the Agent economy. It's a new world.
Pomp just told us Bitcoin trades like high-beta tech in risk-off environments in his prior article about why BTC is falling with stocks. Dalio's debt cycle framework predicts a risk-off environment. Pompliano's own AI-generated analysis from that prior article is a stronger argument for Dalio's own position than Dalio made himself.
Pomp is contradicting his own prior content within the same week without acknowledging it.