Bridgewater Associates, the world’s largest hedge fund with $138 billion in assets under management, is restructuring so that investing decisions are made by more than three men: founder and co-Chairman Ray Dalio and Co-Chief Investment Officers Bob Prince and Greg Jensen.
The news, first reported this morning by The Wall Street Journal today and subsequently confirmed by Bridgewater, is significant because Dalio has been publicly skeptical of adding Bitcoin to its funds.
That’s certainly a defensible position when your funds are providing good returns to investors. Less so when the funds are losing money. According to the Journal, Bridgewater’s flagship fund lost 7.6% of its value last year, never recovering from a devastating March. During that same timeframe, Bitcoin went from around $7,500 to close the year just below $30,000—a roughly 400% increase.
Yet the price movement is part of what worries Dalio. Just last January, pre-pandemic, the billionaire investor called Bitcoin “too volatile” and urged gold instead as a store of value—an asset that doesn’t depreciate over time and acts as a hedge against inflation.
In November, Dalio argued that “governments will outlaw [Bitcoin] and make it too dangerous to use,” though he also openly asked for additional perspectives on its use as a store of value or medium of exchange.
By January 2021, Dalio’s position on Bitcoin had evolved. “I and my colleagues at Bridgewater are intently focusing on alternative storehold of wealth assets, and Bitcoin won’t escape our scrutiny,” he wrote in an investor’s note.
I am writing this to clarify what I think of Bitcoin. https://t.co/l1NHOlRgoM
— Ray Dalio (@RayDalio) January 29, 2021
However, Bridgewater has yet to invest in Bitcoin, staying on the sidelines as institutional investment ticks up.
The newly formalized Investment Committee, to be chaired by co-head of the Investment Engine Osman Nalbantoglu, puts additional eyes on the matter by diversifying the deciding voices to other team members, including Directors of Investment Research Karen Karniol-Tambour and Rebecca Patterson.
That’s not necessarily going to change Bridgewater’s stance toward Bitcoin out of the gate.
In January, Bridgewater analyzed Bitcoin’s performance as an inflation hedge as well as how gold and Bitcoin had performed during market dips. Patterson said key team members came away unconvinced.
“Bitcoin today hasn’t proven itself yet to be a good inflation hedge or good diversifier,” she said in a CBNC interview on February 8 after Tesla’s purchase of $1.5 billion of BTC. “It has the potential to become one, absolutely. But I think today if you were to buy it for that reason, you’d be buying an option for that, not the actual thing. It’s more theoretical than realized so far.”
Just like Dalio’s embrace of Bitcoin.
Guide & Tools