Bridgewater Associates, the world’s largest hedge fund with $ 150 billion in assets, is ready to invest in bitcoin if its volatility decreases and liquidity increases. Rebecca Patterson, director of investment research at the fund, told Bloomberg TV about this.
Three problems of Bitcoin according to Bridgewater
According to her, now the value of the main digital coin can fluctuate within 10% due to publications on Twitter. The volatility of bitcoin is ten times higher than that of the US dollar, Patterson estimated. She is confident that such a volatility indicator is not suitable for most institutional investors.
The company believes that in theory Bitcoin can be used as a currency, but since it is too volatile to act as a stable store of value and there are too few options for its use as a medium of exchange, this option will not work in practice.
Another problem of Bitcoin, a representative of Bridgewater Associates identified low liquidity. According to Patterson, this figure can be increased by creating a regulatory ecosystem to provide investors with a comfortable work with cryptocurrencies.
And the third problem is regulatory uncertainty. Bridgewater Associates believes that the lack of government control over bitcoin prevents its use as a currency.
A senior analyst at asset management firm Bridgewater believes that regulation could potentially make Bitcoin (BTC) a good asset for institutional investors.
Patterson also said that she doesn’t look at Bitcoin as an “alternative currency” but rather as digital gold. “If anything, it’s an alternative to gold or digital gold. I think that would be the better comparison,” she said. Patterson said many investors turned to Bitcoin because of concerns about inflation caused by the central bank’s printing of money. However, for Bridgewater, Bitcoin still needs to prove its status as digital gold.
Is Bitcoin no longer a speculative asset?
More and more companies are going over to the bitcoin side. Recall that JPMorgan analysts recommended that their clients move 1% of their investment portfolio to Bitcoin and other digital assets as a hedge.
Previously, experts from a financial holding company criticized the first cryptocurrency for its volatility. They called it an obstacle for corporations to place liquidity reserves in bitcoin.
Bridgewater founder Ray Dalio, a past critic of cryptocurrency, recently announced that bitcoin will not “escape the limelight” of his company. Dalio admitted that he could be wrong about the first cryptocurrency. Now he sees the prospects for gaining the status of the first cryptocurrency as a store of value. The investor is famous for his instinct and will not invest unreasonably in low-promising projects.
Dalio says bitcoin has successfully transformed itself from a speculative asset into a reliable investment vehicle that could rise in value in the near future. Regardless, Dalio says the problem of hacks, regulatory ambiguity, and excessive government effort remains the biggest threat to Bitcoin going forward. “Since Bitcoin is digital, it is not immune to cyber risks. I am looking forward to a fix ”, he added.
Step forward – two steps back
Since Bitcoin is a highly volatile asset, a correction is inevitable. Actually, this is exactly what we are seeing now. However, analysts are in no hurry to be disappointed in the “coin”, explaining the fall by the usual correction in the market. Cryptocurrency adherents are confident that Bitcoin will win back its positions.
It is clear that the digital economy is no longer possible without the cryptocurrency market. Another question is what place Bitcoin will take on it and how stable it will be. This will also determine whether such large investors as Bridgewater Associates will join it or not.