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Hedge fund manager Ray Dalio said in an interview with Yahoo Finance that he continues to invest in Bitcoin (BTC) and top smart contract platform Ethereum (ETH) as inflation continues to hurt the value of fiat money.
The billionaire investor and former crypto skeptic reiterates that he owns BTC and ETH, which he considers an alternative to cash in times where money is quickly losing its value. When asked for details about his holdings, Dalio said that he is also impressed that Bitcoin is standing strong and continues to grow:
“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.”
Although many investors might still believe that cash is a sensible option in one’s portfolio, Dalio warned that the ghost of inflation materializes rather sooner than later:
“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.”
By serving as a hedge against inflation, Dalio then stressed that crypto assets have an important role to play in any diversified portfolio.
“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.”