Bridgewater has posted its thoughts on Bitcoin. The announcement begins as follows:
With bond yields near zero and pressure on policy makers to diminish the value of fiat currencies, investors are increasingly looking for alternative storeholds of wealth. Bitcoin, the original cryptocurrency, has received a lot of attention as a potential candidate especially with its recent ascent to new historic highs. Bridgewater’s research team has weighed in on the topic and I invite you to explore the analysis.
CEO, Bridgewater Associates
Bitcoin offers some attractive attributes for an investor, such as limited supply and global exchangeability, and is evolving quickly. For now, though, we don’t see it as a viable way for institutions to protect their wealth, largely due to Bitcoin’s volatility, regulatory uncertainty, and operational constraints. Rather, we see it more like buying an option on potential “digital gold.”
We expand on Bitcoin and digital currencies in this collection of research:
•Founder and Co-CIO Ray Dalio describes what he thinks of Bitcoin, putting this decade-old asset into a broader historical context. In his view as a non-expert on cryptocurrency, Bitcoin is a significant invention that deserves scrutiny at a time when alternative gold-like assets are both important and rare. He compares its development with past innovations in the monetary and credit systems and considers questions about supply, demand, cyber risk, and regulation.
•Director of Investment Research Rebecca Patterson looks at Bitcoin’s potential as a storehold of wealth. She discusses its merits, challenges, and unknowns as we see them today. For example, it remains unclear if Bitcoin will provide diversification when portfolios need it most. Looking at Bitcoin’s performance so far, the asset’s ability to offer some diversification benefit seems more theoretical than realized. In a follow-up podcast, she further explores this research.
Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.