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Billionaire investor Ray Dalio, who is a prominent hedge fund manager, recently revealed that part of his wealth is in crypto. During the interview, he advised others against holding cash due to inflation.
Details of Ray Dalio’s Crypto Investment
During a recent interview with Yahoo Finance, Ray Dalio, the founder of Bridgewater Associates revealed that he owns crypto. Dalio revealed that he owns both BTC and ETH as a small percent of his portfolio. According to him, this was part of his portfolio diversification strategy.
However, he refused to reveal exactly how much he has invested in crypto. He only stated that it was a small amount of his total portfolio. According to him, crypto is an alternative form of money in a world where cash is depreciating. He added that he was impressed that the programming behind crypto had held for the past 11 years. Dalio noted that it had not been hacked and he was impressed by the growing adoption rate.
Cash Is Losing Value
Dalio discussed the growing inflation of fiat currencies during the interview. The billionaire investor stated that one reason why crypto was growing in popularity was the depreciation of cash. Dalio has been a longtime advocate of crypto. Earlier this year, he compared Bitcoin with gold.
During the interview, he advised investors against judging their returns based on how many dollars they had. For instance, he pointed out that anyone who held all their wealth in cash in 2021, would lose 4% or 5% of it to inflation. In his opinion “cash is trash.”
Is Crypto A Hedge Against Inflation?
While Bitcoin and Ethereum have huge differences when it comes to their protocols and possible use cases, they have remained the two most popular choices for investors. Many in the crypto world view them as a hedge against the inflation of the USD.
While there is still a big difference between the market cap of Bitcoin and ETH, it has narrowed greatly in Q2 2021. This is because ETH experienced a price jump of almost 120% in this period. One reason for this might be growing investor interest in Ethereum’s utility. Major institutional investors have continued to deploy significant capital into ETH.
One prominent proponent of Bitcoin is Robert Kiyosaki, the author of Rich Dad Poor Dad. In one tweet back in June 2021, the author warned that the world economy was in the “biggest bubble in world history.” He advised people to invest in gold, silver, and Bitcoin.
How Much Should One Invest In Crypto?
During the interview, Ray Dalio stated that the most important thing when investing was portfolio diversification. He noted that various asset classes significantly outperform cash. For instance, he noted that when the economy went down, bonds usually performed better than stocks. In his opinion, portfolio diversification was important and crypto had a small role to play in that. In his opinion, people should not hold onto cash since it is going to be a problematic asset.
Summary
As part of a portfolio diversification effort, holding a small amount of crypto would be useful. However, due to the highly volatile nature of the crypto sector, one should only invest an amount they can afford to lose in case the market does not go their way.
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