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Veteran hedge fund manager and former crypto skeptic Ray Dalio says that he’s investing in Bitcoin and top smart contract platform Ethereum (ETH) as inflation continues to debase cash.
In a new interview with Yahoo Finance, the billionaire investor says that he owns BTC and ETH as an alternative to cash during a time where money is quickly losing its value.
When asked about his cryptocurrency portfolio, Dalio says,
“Well, I’m not going to give the precise amount of Bitcoin – but I do own some Ethereum as well. But the answer to your question is that I don’t own a lot of it. I view it as alternative money in an environment where the value of cash money is depreciating in real terms.
And I think it’s very impressive that for [the] last 10, 11 years, that programming has still held up, it hasn’t been hacked and so on, and it has an adoption rate.”
Dalio says that while many investors believe that cash makes sense as part of a portfolio, inflation may eat away at fiat currency more than most expect.
“I would like to say that cash – I’ve been quoted [saying] ‘cash is trash’ – which most investors think is the safest investment is, I think, the worst investment. And that it’s important because it loses buying power.
The one thing I would say to investors is don’t judge anything in your returns or your assets in nominal terms, in terms of how many dollars you have. View it in terms of inflation-adjusted dollars.
And like so cash this year, you’ll lose 4% or 5% to inflation. So pay attention to [that], because I believe that that’ll be the worst investment.”
Dalio then says that cryptos have a role in diversifying investor portfolios, which could serve as a hedge against inflation.
“The important thing is to diversify one’s portfolio well. Because we know from the surprises in the balance – we also know that those asset classes on average significantly outperform and will significantly outperform cash.
And that they move between each other in a way that has to do with correlations, because when things go down when the economy goes down, then bonds will do better than stocks, and so on and so forth. So diversification of assets – I view crypto as a small piece of that.”
ETH is exchanging hands at $3,851 as of writing, a 5.7% decrease from its seven-day high of $4,084.