Bitcoin vs. Gold: Here's What the Founder of the World's Largest Hedge Fund Would Choose

The price of Bitcoin and gold surged in March after Silicon Valley Bank led a string of bank failures and liquidity crises. Few analysts were surprised by these price movements as both are used to circumvent banks and other centralized financial institutions. The question is, which one is a better choice in the current economic climate?

Ray Dalio, the founder of the world's largest hedge fund, Bridgewater Associates, has weighed in on the great Bitcoin vs. gold or digital gold vs. real gold debate. Few were surprised to hear his opinion as he is well known for his bullish stance on gold. In an interview with Maria Bartiromo at Fox Business, Dalio expressed that he much prefers gold over Bitcoin, even though he said that he holds a small amount of Bitcoin. 

Dalio has soured further on Bitcoin since the interview, saying that Bitcoin “has no relation to anything” and that it receives disproportionate attention. Dalio believes that Bitcoin's status as a form of digital gold is still unproven, citing concerns that it’s too volatile to be money or a store of value. He acknowledges the potential of blockchain tech; he just doesn’t think Bitcoin will be the one to win out. 

In contrast, gold is stable because it has been a reliable store of value and medium of exchange for thousands of years. Its stability, scarcity and inherent value make it a trusted asset for preserving wealth. 

Dalio has emphasized that he is not opposed to cryptocurrencies in general but remains skeptical of their ability to replace gold. He has previously stated that he owns "some Bitcoin," but his personal investments in the digital asset have been limited compared to his holdings in gold.

One of the main arguments against Bitcoin as a store of value is its volatility. Although the digital asset has seen a meteoric rise in value over the past decade, it has also experienced significant price fluctuations. In contrast, gold's price has remained relatively stable, providing investors with a more secure option for preserving their wealth.

Another concern Dalio has raised is the possibility of government intervention in the cryptocurrency market. In a recent podcast, he warned that “in history, they’ve outlawed gold and they’ve outlawed silver and so on, and they could outlaw Bitcoin.” He isn’t the only one who expects world governments to try to shut down a currency they have no control over before it supplants their own. 

As governments around the world start to pay closer attention to digital assets, there is a growing risk of regulatory crackdowns that could impact Bitcoin's value and adoption. Gold, on the other hand, is less likely to face such intervention because it’s a physical asset, it already plays a large role in the global economy and would be extremely difficult to ban. It can also provide unique exposure to things like volatility and fear in the markets, making it a popular tool for diversification and hedging.

Investors are turning to gold and silver in droves to protect their portfolios as uncertainty rises in the economy. Check out Benzinga’s Precious Metals Hub to master the sector and discover the best precious metals trading platforms.

Check Out More Precious Metals Articles From Benzinga:

• Is Silver the Next Gamestop? How Retail Traders Challenged Wall Street Giants Again
• 3 Things You’ll Want if Sh*t Hits the Fan
• Will Bank Runs and Failures Cause a Run on Gold and Silver? How Precious Metals Can Protect Your Wealth