Billionaire Hedge Fund Investor Ray Dalio Now Advises Holding a Small Amount of Bitcoin. Here's Why He's Wrong.

Ray Dalio, the founder of Bridgewater Associates, has recently changed his views on Bitcoin. In 2017, he had criticized it, stating it was not a reliable store of wealth. Now, in an article published on August 21, Dalio advised investors to hold a small amount of Bitcoin, citing concerns about debt and deficit issues in most economies. He believes non-government-produced money like Bitcoin could help mitigate this risk and expects it to perform well.

Dalio suggested that investors could allocate up to 2% of their portfolios to Bitcoin. While he owned Bitcoin himself, he disagreed with his own advice on using Bitcoin as a risk mitigation strategy. Instead, he recommended allocating 10%-15% of one's portfolio to gold to achieve better risk reduction. Dalio pointed out that Bitcoin typically moves in the same direction as stocks, which moved together eight out of ten years between 2016 and 2025, including during the 2022 bear market when Bitcoin lost more value than the S&P 500.

Comparing Bitcoin to gold, Dalio noted that gold usually moves in the opposite direction of stocks, holding its value better during a bear market. For instance, gold grew by 0.3% in 2022, while Bitcoin lost approximately three times as much. While Bitcoin can provide exposure to digital assets, its extreme volatility makes it a risky choice for most investors. It is better to consider a well-rounded portfolio of stocks and bonds for risk reduction rather than relying on Bitcoin.