Ray Dalio Warns Bitcoin Is Traceable and Not a True Safe-Haven Asset — Michael Saylor Hits Back

Bridgewater Associates founder Ray Dalio believes that central banks around the world aren't looking to adopt Bitcoin as a reserve asset, as the digital asset lacks privacy and transactions can be traced and potentially controlled.

'While Bitcoin gets a lot of attention, it hasn't played the safe-haven role many expected,' Dalio wrote in a late Monday post on X.

Dalio added that Bitcoin also has a high correlation with tech stocks, so when 'investors get squeezed in other areas of their portfolio, they sell their Bitcoin to cover it.'

The 90-day correlation coefficient between Bitcoin and the Nasdaq was 0.89, according to TradingView data, with an R² of 0.79. In simple terms, it means that 79% of Bitcoin's price movements can be explained by its relationship with the Nasdaq over 90 days. Overall, the data portrays Bitcoin's behaviour more as a risk-on asset than a store of value.

In comparison with gold, Dalio said Bitcoin is a relatively small market, whereas gold stands alone. 'There is only one gold. Ultimately, gold is more widely held, deeply established, and still plays a central role in the global system,' he wrote.

Although Dalio had earlier disclosed allocating 1% of his portfolio to Bitcoin, it is true that transactions within the decentralized system built on a public ledger can be viewed in real-time by anyone.

A Bitcoin block explorer will return the entire transaction history when you enter a valid wallet address. While wallet addresses are not directly linked with identities, blockchain analytics firms and law enforcement agencies can often trace funds movement and link activity back to individuals.

This means that if a central bank accumulates assets, related transactions can be tracked on a public ledger easily. This point is also a concern for large institutional players. At Consensus Hong Kong in February, participants highlighted that the adoption of blockchain technology at the institutional level could depend on stronger privacy features, especially for large transactions.

Michael Saylor Pushes Back on Dalio's Claims

Strategy co-founder Michael Saylor was swift to respond to Dalio's post on X. He said gold is analog capital, whereas Bitcoin is digital capital, which means that for BTC, transparency is a feature and not a bug, making it suitable as global collateral.

'Since we adopted the Bitcoin Standard on Aug. 10, 2020, Bitcoin has outperformed gold with a higher Sharpe ratio,' Saylor added. Strategy is the biggest corporate holder of Bitcoin.

Recently, Saylor also disclosed his plans to burn the private keys to his Bitcoin wallet after his death, which means his holdings won't be accessible anymore and will be lost from circulation forever.

He thinks that the plan is a form of pro-rata contribution to all other Bitcoin holders. With total BTC supply capped at 21 million tokens, Saylor is of the view that burning the private keys would ramp up the scarcity aspect of the cryptocurrency.

Saylor believes that every BTC that is no longer accessible contributes to the intrinsic value of the digital asset. As a crypto billionaire, Saylor understands the long-term value of Bitcoin, and his plan to support scarcity could become a tailwind for BTC prices in the future.

Disclaimer: Our digital media content is for informational purposes only and not investment advice. Please conduct your own analysis or seek professional advice before investing. Remember, investments are subject to market risks and past performance doesn't indicate future returns.