Billionaire Ray Dalio recently dumped ice cold water on bitcoin, arguing that gold is a better store of value for a number of reasons.
These include bitcoin’s lack of privacy (transactions are fully visible on the blockchain); the fact that central banks aren’t bullish on bitcoin the same way they are with gold; and, of course, the risks of it being hacked by quantum computers – although this is probably still decades away.
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In this episode of the Crypto Pod, macro strategist and Novaque CEO Shiven Moodley takes issue with some, though not all, of Dalio’s criticism of bitcoin.
The quantum computing threat is probably still decades away, says Moodley, and bitcoin developers are already working on solutions to address this. As such, that’s not an imminent threat.
On the question of central banks showing little or no interest in bitcoin, Moodley says that conclusion may also be premature. For one thing, central banks abhor volatility – and bitcoin offers plenty of that.
“Central banks have been hoarding tonnes of gold over the last two to three years. Major hoarding really starting with the Russia-Ukraine war and accelerated from there. Ray Dalio mentioned this on the All-In podcast, asking whether bitcoin can become this reliable safe haven?
“He’s not entirely wrong,” says Moodley. Bitcoin maximalists argue that it is the best store of value out there, and that is true when viewed over the longer term.
Bitcoin has smashed gold in overall performance. But it’s the volatility that hurts.
“Yes, it [can act] as a safe haven asset at certain times, but it depends how you’re comparing it. Central bank policies have been structured around gold reserves to manage currency volatility within jurisdictions.”
Bitcoin is not yet at that stage where it considered a comparable store of value to gold.
At the same time, its volatility is part its attraction.
“By tomorrow I might see a 10% increase [in BTC]. In that sense it operates as a sort of speculative asset in its own asset class, but there are also functionalities built into it.”
Bitcoin has shown some correlation with gold during periods of heightened risk, and this was particularly evident in the post-Covid years.
However, there’s been a decoupling in the last year with gold outperforming by a wide margin. Prior to that, it was bitcoin doing the heavy lifting.
Are investors falling out of love with bitcoin?
Outflows from ETFs may suggest they are, but investors could just as easily jump back into the market when prices show signs of bottoming.
Some whales are looking to re-enter the market when prices fall to around $50 000 or $47 000, but there’s a risk we may never see these prices again.
A break above $74 000 and $82 000 would also trigger a new wave of buying, based on current market data. The love-hate relationship with bitcoin follows every market cycle.
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Now it’s out of the headlines, scraping along the bottom of the Fear and Greed index, and heavily oversold on the RSI (Relative Strength Index). Historically, these have been the best times to buy.
Moodley remains strongly bullish on Ethereum, which has fallen below $2 000.
“Under $2 000, it’s still very attractive, particularly when you look at what Ethereum is going to bring to the market in terms of utility. You’ve seen Base, which is Coinbase’s blockchain, come on as a Layer 2 on Ethereum, promoting more sustainable flows within the Ethereum network.
“We’ve seen the Ethereum Foundation get [its] act together in terms of their treasury policy, because a lot of people were very upset in terms of them flooding the market at given points in time. I think there’s a lot to look forward to in Ethereum.”
What’s coming in this new financial frontier will be staggering.
AI agents may soon be hunting around in real time for the best yields on your funds, managing personal and company treasuries to ensure they are safe, generate strong returns, and make them ready to deploy in a micro-second.
Companies are also likely to use this new tech to optimise transfer pricing, using stablecoins as the primary currency.
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