Biggest Hedge Fund Manager In The World Warns "Bitcoin Is A Bubble", Says Gold Is Money

Tyler Durden's picture

Bridgewater Associates founder Ray Dalio, the 68-year-old founder of the world’s largest hedge fund, said bitcoin is "in a bubble" during an interview on CNBC Tuesday morning, arguing that the so-called currency is too difficult to spend, and too volatile to be a useful store of value.

During the interview, Dalio argued that most investors who buy the digital currency do so with the hope of making a quick speculative profit, undermining bitcoin’s functionality as a currency.

“There are two things that are required for a currency. The first thing is that you can transact in it, it’s a medium of exchange. The second thing is it’s a store of value. Bitcoin today…you can’t spend it very easily.

 

In terms of a storehold of wealth, it’s not an effective storehold of wealth because it has volatility to it. Unlike gold, let’s say, which reflects the value of money, its more stable than the value of money, bitcoin is a highly speculative market.”

Dalio added that he doubts that governments will allow bitcoin transactions to remain anonymous in perpetuity. The IRS has sued Coinbase, a popular US bitcoin exchange, demanding records on client transactions – a decision that many in the community saw as the beginning of the US government’s effort to unmask the currency’s users. Aleady, using sophisticated blockchain analysis techniques, US authorities have been able to trace bitcoins back to their respective owners, making it more difficult for tax cheats and money launderers to use the digital currency to facilitate their crimes.

“The idea that it will be private in terms of transaction…in other words people won’t know what you’re doing and it will be a private currency…is really questionable.”

Based on the amount of speculation alone – the price of a single coin has risen by more than 300% since the beginning of the year – Dalio argues that the only logical conclusion is that bitcoin is in a bubble.

“We take these criteria, and we define a bubble based on those criteria, bitcoin is a bubble. It’s a shame – it could be a currency, it could work conceptionally, but the amount of speculation that’s going on and the lack of transaction, the idea that it will be private in terms of transaction…is really questionable if you look at what’s gone on in terms of governments to examine it.”

Bitcoin also faces competition from other digital currencies like Ethereum, which compounds the problem of investing in digital currencies, in Dalio’s view.

“And then there are other cryptocurrencies. Bitcoin might lose competition to other cryptocurrencies. So is it a bitcoin bet that we’re making or a cryptocurrency bet. It’s very much speculative people thinking can I sell it at a higher price…and so it’s a bubble.”

Bridgewater founder Ray Dalio: Bitcoin is a bubble from CNBC

Bitcoin reached an all-time high just shy of $5,000 on Sept. 1. But the digital currency pulled back earlier this month amid reports that Chinese regulators were forcing local bitcoin exchanges to shut down as part of a crackdown on ICOs. It’s decline accelerated - briefly sending the digital currency below $3,000 a coin, its weakest level since mid-July - after JP Morgan CEO Jamie Dimon proclaimed that bitcoin is “a fraud” and that he'd fire any JPM trader caught buying it. Of course, his remarks were followed almost immediately be reports that JPM had  beeen one of the biggest buyers of a bitcoin-linked exchange-traded note traded on Nasdaq Stockholm, one of the only bitcoin-focused securities to trade on a public exchange in any market, raising important questions about whether the bank was violating its fiduciary duty by assisting clients to transact in an asset that the bank's CEO believes to be fraudulent.

However, over the past two years, bitcoin has ripped the face off of every bear who has spoken out against It. Over the summer, billionaire investor Howard Marks was forced to recant his bearish view in an investor letter, issuing a now-famous mea culpa. Unlike its response to Dimon's remarks, bitcoin barely moved after Dalio's interview aired, and has remained almost unchanged on the day.

How long before Dalio and Dimon are forced to do the same?
 

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NugginFuts's picture

Well, that settles it, I guess. Thanks Ray!

Whew! The debate is over. Back to your regularly scheduled BTFD stock market!

Oh regional Indian's picture

If demographics are a tell, the story is clear as day....

Old people hate bitcoin. young people love it.

Old fogies are losing their grip. Old rules mean less and less.

I think block-chian and smart contracts are going to KILL it, the systme that is.

Bitcoin might lose first mover advantage as The ripples and dashes innovate out of bitcoin's weakness.

It's the new business models old fogies cannot get their minds around.

Smart-contracts redefine trust.... ponder that in today's low-trust environment...

Oh and Banks and bankers are the world's biggest criminal class.... fuck them...

tmosley's picture

>The thing that makes me obsolete is a bubble!

Hahaha

The_Juggernaut's picture

Translation: This time it's different.

tmosley's picture

Nope, it's exactly the same.

Exactly the same as when the automobile replaced the horse and buggy. Exactly the same as when email replaced snail mail. Exactly the same as when streaming video replaced cable TV. Exactly the same as when cell phones replaced landlines. Etc etc.

overbet's picture

The whole privacy thing may not be completely anonymous without taking additional precautions, but even if you buy through an exchange and verify your identity you are still much more anonymous than traditional online payment options.

Buying on an exchange you aren't anonymous to .gov, but your info isnt getting bot n sold by companies or advertisers.

BaBaBouy's picture

SAD... For Snowflakes Bitcoinz Crowd ...

JimT's picture

Its looking more and more like eveytime one of these articles comes out its only succeeding in generating more interest in crypto.

Any publicity is good publicity.

Manthong's picture

 

The value of sovereign bonds and interest rates have their value tied to gold (although the CB’s have perverted and masked this fact).

But don’t take my word for it go ask Greenspan, Bernanke or Larry Summers.

https://youtu.be/T0jpso4jDC4

Go to 17:00 and listen for at least three minutes

 

"Gold is money, Everything else is credit"

-J P Morgan

 

fx's picture

OK, let's suppose that cryptos are indeed a bubble (I tend to agree actually). but where in the bubble are we? Bubbles ain't per se something to fear. If you get in at their beginning, they can be extraordinary wealth creators, if you play them right. What if there are still thousands of percents of gains to be made before the bubble bursts? Is staying away the best advice? For the faint of heart, for sure. But for someone who  wants to make money and know how to control risk, a bubble is absolutelyx great news.

Golden Phoenix's picture

Agreed. A bubble is anything not stuck in the mud it wells up out of.

DWD-MOVIE's picture

I'm making over $14k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://disq.us/url?url=http%3A%2F%2Fwww.Jobzon3.com%3Ab8eR_DQLwGRPVGtFvv...

OpenThePodBayDoorHAL's picture

LOLOLOL (above)

"Smart contracts"

OK folks put your thinking caps back on.

"Contracts" and "software" are a horrible mix. A contract is immutable, otherwise you can just call it something else, a "conditional arrangement" or something. Immutability is a necessary condition of a contract.

But immutability is a horrible condition for any software. How will you do bug fix? How will you do upgrades? How would you do regression testing? (Especially if like the geniuses at Ethereum you invented your own brand-new language, database, network AND virtual machine, none of which have any industry-standard testing tools).

So upgrades and bug-fix for any part of the Ethereum network would need to be fully backwardly compatable for every "contract". Or else oops, they weren't contracts, were they. Probably explains why there isn't a single successful Dao out in the world.

And anyone following the Bitcoin scaling conniptions would need to agree that getting upgrades and bug fixes are a giant cluster anyway.

For the moment "crypto" is a thing that goes up. That's cool. But the great new internet and programming paradigm it is not.

 

TuPhat's picture

I paid cash the other day at Walmart.  Totally anonymous, even more so than bitcoin.  I keep some cash on hand and the value remains the same other than a slight loss over a period of years.  If I buy bitcoin it won't be anonymous and the value can increase or more likely plummet.  Bitcoin is not a currency or store of value or anonymous.  Go ahead and buy all you want while it still exists.  My grandkids will inherit my gold.

Green Bastard's picture

"...a slight loss over a period of years..."

https://goo.gl/G5PaVa

 

 

BennyBoy's picture

 

It's old school vs new skool.

It's a digital world bitchez

in4mayshun's picture

When Governments and Google take over Crypto, (and they will) there will be little difference between your current ATM card and Bitcoin. 

So I'm still trying to figure out what the excitment about crypto currencies is all about. You want true anonymity? Pay with cash, PM or barter.

rosiescenario's picture

Its experience versus inexperience.

BallAndChained's picture

> It's a digital world bitchez

You live in a digital house and eat digital food?

ShorTed's picture

other than the fact that 35 cameras folled you through the store and 1 particularly watched you at the check-out, yeah, totally anonymous.  just barely beats using a credit card.

in4mayshun's picture

Its gonna be awhile before retail has enough $$$ to spend on surveillance cameras that can identify a face. That tech cost big dollars currently. Trust me on this, I consult with businesses every week that want "complete" camera coverage until they find out that it will cost them >$250,000 for that definitive of surveillance.

Herodotus's picture

I always wear a ski mask when I am in the Wal-Mart checkout line.

overbet's picture

Dont need to recognize your face. They can get your plate in the lot. Are you parking far away and driving to multiple locations for your false sense of anon cash purchases or are you just piling up video of you using cash you havent claimed? Gimmie a break any shopping center is covered with cctv they can follow you home if need be. 

overbet's picture

"or more likely plummet" You know this how? Short it then and watch your ass get handed to you. BTC can be anon. Our gold has and will continue to be repressed, btc cant be shut down as easily as gold is manipulated. Why do you think they attack it so frequently? Fear.

They dont fear our gold. And as far as cash being anon, that is true if you earn in cash otherwise its not true. Most do not earn in cash. All the btc haters on here puzzle me because I am faily sure that collectively the haters havent read more than 1-2 books on the subject yet they KNOW whats gonna happen. Hysterical

ejmoosa's picture

Ford's here...other's are not.

Have a look at all the horse and buggy replacements that did not survive.

Yet somehow Bitcoin, one of the first, will also be the one that lasts?

If it's exactly the same, then hedge your bets...

BigJim's picture

TMos knows! He's a ZH oldtimer, so you can trust him!

I've made an absolute FORTUNE following his advice and loading up on silver!

Or, at least, I will when it goes to $100 an ounce as promised!

tmosley's picture

>Or, at least, I will when it goes to $100 an ounce as promised!

I promised you it would go to zero, actually. The bullish part of my thesis was hijacked by cryptos. Hence, after an agonizing reappraisal of the big picture, I went into cryptos.

in4mayshun's picture

If your investment strategy includes chasing bandwagons you may want to rethink.

tmosley's picture

>Yet somehow Bitcoin, one of the first, will also be the one that lasts?

Who said that? I certainly didn't. I'm backing better tech, and strongly. Bitcoin is a pretty small part of my crypto portfolio.

BallAndChained's picture

You were pumping Bitcon and calling everything else shitcoin before.

BennyBoy's picture

 

Why hasn't Dalio been replaced with smart software, AI.

 

The central planners's picture

Bullshit, cryptos are digital currency and digital currency exists since the 80's that "revolution" happend along time ago cryptos ever exist. That analogy of the horse and the car is pure BULSHIT!!

The central planners's picture

You're right is a BULLSHIT analogy.

tmosley's picture

Admitting you have a problem is the first step to recovery.

VD's picture

said the resident crypt0-muppet on zh 24/7/365 like a good hoe troll addikt.

 

 

VD's picture

oh, i sure did. but you're too fucking st00pid to appreciate it.

tmosley's picture

Peanutz love people who type and act like they are 13 years old. As long as they are on their "side", of course.

CNONC's picture

But automobiles, emails, and cell phones didn't rise in value a few hundred thousand percent. As a rule, prices fall as a new technology eclipses an old one. This is not the same.

tmosley's picture

That is the difference between money and manufactured goods.

JethroBodien's picture

What part of volatility and instability don't you understand.   My apologies if you were a special ed child and are now a special ed adult ...

Mementoil's picture

No, it's not the same.
Because people bought automobiles in order to drive them, and email servers in order to send mail, whereas most crypto-currency users are not getting them in order to pay their rent or buy their groceries, but rather as a speculation, because their price is on the rise.

If these coins are so much better than Dollars and Euros, then why is hardly anyone using them in everyday commerce?

 

Oh, and one more thing - BTC better top 5000USD quick, or else it is setting itself for a nasty head and shoulders pattern...

tmosley's picture

I bow before your mighty psychic powers. 

Golden Phoenix's picture

Agreed on the H&S at least.

TruthHammer's picture

"Nope, it's exactly the same.

Exactly the same as when the automobile replaced the horse and buggy. Exactly the same as when email replaced snail mail. Exactly the same as when streaming video replaced cable TV. Exactly the same as when cell phones replaced landlines. Etc etc."

 

You say a lot of stupid things, but this is getting up there with the stupidest.

As always you try to convolute techonology and actual crypto currencies. 

First of all:

a.) The debate is whether cryptos can be accepted as real currencies, as real money.  This would be the equivalent of a black horse replacing a brown horse, not a car replacing a carriage.  Using your own stupid argument, properly worded, would say:  cars will  replace horses for "Transportation".  In that case "Transportation" is money or currency, and a new "form" of it will replace the old.  ie cryptos replacing paper money or gold, etc.  Crypto need to prove that can be used for "Transportation" before they can replace an old form of it.  What you are actually saying is "This smart phone can replace the horse and buggy". 

b.)  There has been ZERO serious adoption of Crypto for economic activity.  It is currently just a new form of commodity, with purported future potentials, it hasnt realized any of that potential yet.  Which is why 0.000000000000000000000000001% of world economic activity occurs in crypto currencies.  The price per unit relative to other currencies is irrelevant in terms of it becoming used as a currency, if all it is ever used for is buying and selling of the crypto itself.

c.) The TECHNOLOGIES used in things like shitCoin, are new and are the actualy things of "potential" value.  Those TECHNOLOGIES and means of transaction, have nothing to do with shitCoin per se.  shitCoin just happened to be the first penny stock to catch the buzz.  The same technologies used in shitCoin can be married to any thing, including virtualized forms of USD, Gold, or any other monstrosity your banker buddies want to create.

d.) Lastly, the internet, dark or light, is a wholly owned subsidiary of Banker Hegemony Co.  So is your job, your home, your city, your food, and everything else you do.  If at any point the technologies being used in crypto, found in a currently unregulated thing like shitCoin, start to actually be used for a real significant amount of economic activity, and not just a tulip exchange, the "MAN" will either regulate it or destroy it.  And they dont need to touch it directly to do either, when they control YOU and the world COMMUNICATION SYSTEM.  shitCoin millionaire today, swat team kicking in your door tomorrow for commiting the crime of making a shitCoin transaction, or owning a shitCoin wallet.

 

You dont understand economics or finance, OR TECHNOLOGY, so keep spewing your BS, but you dont know what you are talking about, PERIOD.

*kisses*

Golden Phoenix's picture

<There has been ZERO serious adoption of Crypto for economic activity.

Uh, yeah, that's why people in Venezuela are using bitcoin to buy their groceries from Amazon when their local stores are empty. 

Only an idiot closes his eyes and believes his own thoughts instead of opening them and seeing what's unfolding in the world around him. But, hey, if YOU can't see it then it must not be true. And your hypotheticals must be correct. Good luck with that.

TruthHammer's picture

Only an idiot who doesnt understand the world around him makes such assanine responses to someone who does...

 

In your esteemed opinion, what is the total notional value of groceries bought in shitCoinz?  ( LOL )

Feel free to include proof of said value as well, when you answer (you wont )

Then look up the total amount of food, by value, consumed in a day in Venezuela, and divide. ( hint: 0.00000000000000000000000001% )

 

You wont be able to validate any of the actual information behind your response, and even if you could (you cant), you would find that it is just as i said, "zero SERIOUS adoption".  Your response is laughable, and disputes none of what I said. 

 

Even if the whole country was buying groceries ONLY with shitCoinz, and the GROCERY STORE was accepting it directly at the cash register, and the people's wages were being earned in shitCoinz directly, it still wouldnt disprove ANY of my points.

shitCoinz is the recognizable (penny stock) name for those trying to use the TECHNOLOGIES which I mentioned (crypto), and which while exist in shitCoinz, are in no way limited to it.

 

Venezuela does NOT control the WORLD COMMUNICATION system, and if they did, they would already be doing exactly what I said.  And, if shitCoinz ever do become an appreciable part of Venezuela's economic activity (they wont), Venzuela WOULD hire or pay the people necessary to do exactly what I said to their portion of the world Comm. system. (Block, ban, track, or turn off).  As I correctly pointed out, they dont need to "break" the crypto tech, they just need access to the PEOPLE (they have it) and the COMM SYSTEM (THEY HAVE IT TOO), to effect the same result.

It would quickly become, bye-bye internet and cell phones, hello banned technologies, and SWAT teams black bagging people in the night who dare to try and hold, own, or use shitCoinz.  A Store accepts it?  Owner hanging from a lamp post, etc etc.  And unlike Gold, Art, Rolexes, USD, etc, the black market can be taken away via COMM SYSTEM shutdown...

 

If you dont understand the argument, dont try and participate, or you will just end up getting hammered with the truth ;)

Yukon Cornholius's picture

Tell me, Ray, are the dollar, yen, pound etc. stores of value? Have they kept their purchasing power over the years?

Mr Dalio is a smart man, but he needs to review the difference between currency and money.

TuPhat's picture

OK I reviewed it.  Bitcoin is not currency and it is not money.