In a recent interview, Bridgewater founder Ray Dalio shared his views on the current decision of the Federal Reserve (FED) to raise interest rates by 25 basis points (bps) and the performance of Bitcoin (BTC) over the past few years.
Speaking to CNBC, Dalio stated that what the crypto industry and Bitcoin have done in the past 12 years has been “amazing.” However, the hedge fund manager believes that Bitcoin “has nothing to do with anything.” For Dalio, Bitcoin is a “small” thing that gets “a disproportionate amount of attention.”
The price of Bitcoin moves on its own, while the value of Bitcoin is less than a third of the importance of Microsoft shares, said Dalio. For the Bridgewater hedge fund founder, there are more exciting assets in terms of value and wealth storage.
There are many other industries that are more interesting to Dalio than Bitcoin and the cryptocurrency market, such as biotech and the stock market. Cryptocurrency is not an effective means of exchange for them, and they consider that it will not be enough money in the future.
Commenting on the recent decision of the FED and the tightening of monetary policy implemented to control inflation, Dalio said that in “the world we live in, money, as we know it, is in danger.”
Dalio’s View On Future Wealth Stores
For Dalio, the importance of saving wealth is key to future macroeconomic recessions. He suggested that every economic crisis is a cycle, but “Bitcoin is not the solution.” In addition, Dalio claims that stablecoins are not the solution to future problems, as he points out that they will return to fiat currencies. He warned:
(…) I think that what really will, what will be the best is the coin inflation linked. In other words, something where basically you will say okay, this will give me purchasing power because each individual wants, do they want? They want to secure their purchasing power, if you want to save.
In this sense, Dalio assures that the industry will see the development of new currencies that have never been seen before, which will attract investment and save wealth. He emphasized that Bitcoin will remain “unsuitable” for this task in the future.
Bitcoin Reacts To FED Announcement
After the start of 2023, the bullish trend of Bitcoin, and the recent economic measures of the Federal Reserve, the market has adopted a new sentiment.
After months of consolidation and lopsided price action, sentiment and macroeconomic conditions appear to favor the bulls, with an opportunity to set the trend for the rest of 2023.
Bitcoin has grown by nearly 41% in the last 30 days and is aiming to hit a yearly high this month. The flagship cryptocurrency was trading at $23,500 at press time, and was down 1.1% in the last 24 hours, reaching as high as $24,300 after the Fed raised interest rates.
Cover image from Unsplash, graphics from Tradingview