Sometimes success can be detrimental. Or at least that’s what Ray Dalio wants to believe about bitcoin. Yes, we are talking once again about legendary investor Ray Dalio — a guy whose flip-flops on BTC can be equally amusing and nauseating.
In late March, Dalio compared bitcoin to gold… but in terms of regulations and bans. Now this time, he claims that the success of cryptocurrencies may be what brings them down.
With all fairness to Mr. Dalio, he seems to be one of those people who gets taken out of context by the media regularly. His first clear opinion on bitcoin was that it was a hell of an invention. Then, he commented on possible government bans on cryptocurrencies. Honestly, all of this felt like he was conspiring to prevent the dollar from losing its value to BTC.
Although he’s maintained that cryptocurrencies are excellent economic vehicles, the media only shared the part about him saying that the government would ban bitcoin.
Dalio, however, has always been open to crypto. He is not advocating a cryptocurrency ban. Yet, he does state that the very success of cryptocurrencies could bring much tougher regulations.
IS BITCOIN POWERFUL ENOUGH TO BE A THREAT?
So, here’s the thing. When you go to the grocery store and overhear the checkout person talking about bitcoin with a customer, that’s when you understand just how big BTC has become. From the world’s biggest billionaire to a math teacher in your local school, everyone these days seems to know what BTC is.
That’s powerful. And it might be dangerous, at least to the U.S. government.
That’s exactly Dalio’s main point. The debate as to whether bitcoin is a store of value or a payment system is for all practical purposes over as people are using it for the former. Bitcoin may go up a lot or down like never before but a Satoshi will always be a Satoshi. And at the current rate, bitcoin will outpace dollar inflation and is a better investment than gold.
REGULATIONS IN SIGHT?
Ray Dalio is referring to this when he says that the biggest risk for cryptocurrencies is its own success. He claims that this success could attract strong regulators. Dalio says that no government wants to have an alternative currency as a store of wealth.
These warnings come at a rather delicate time. Not only is the market, in general, dropping rapidly, but we also have regulatory movement.
Recently Andrew Bailey, president of the European Central Bank (ECB), said bitcoin has no intrinsic value adding that investors should be ready to lose it all. Also, Gary Gensler, the new chairman of the Securities and Exchange Commission (SEC), has stated that his agency will work on a regulatory framework to protect the investor.
In conclusion, while Dalio remains bullish on crypto, he is careful to tread lightly about the situation. He insists that regulation is not going to be regulation per se, but rather shocking taxes.
The truth is, regulation will come sooner or later. And we can only expect and hope it will make things better for investors. So maybe Dalio is right, maybe he’s not. But what we do know is that his propensity for predictions will likely continue.