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Sept. 19, 2017, 5:11 p.m. EDT

‘Bitcoin is a bubble,’ says the head of the world’s largest hedge fund

Ray Dalio says bitcoin qualifies as a bubble based on Bridgewater’s criteria

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By William Watts, MarketWatch


Bloomberg
Ray Dalio

The founder of the world’s largest hedge fund says cryptocurrencies like bitcoin meet his firm’s criteria for a market bubble.

Bitcoin and its peers can’t be spent very easily and they make for a poor “storehold of wealth” compared with, say, gold, due to their extreme volatility, Ray Dalio of Bridgewater Associates told CNBC in a Tuesday morning interview.

Read: Everything you need to know about digital currencies, in one massive graphic

“Bitcoin is a highly speculative market. Bitcoin is a bubble,” he said.

See: Bitcoin might be forming a top when…your 68-year-old dad paints a picture of it

Bitcoin /zigman2/quotes/31322028/realtime BTCUSD -0.15%  hit an all-time high around $4,950 on Sept. 1 but has since retreated to $3,982.13, according to research site Coindesk.com . For the year to date, the currency is up 311%. By comparison, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.0047%  has gained about 13% so far in 2017, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX -0.19%  is up about 12% over the same period.

Check out: Bitcoin at crossroads after shedding more than $27 billion in value

/zigman2/quotes/31322028/realtime BTCUSD 16,807.18, -25.53, -0.15%

The billionaire investor said it was action in the cryptocurrencies has been “very much” driven by people thinking simply that they can sell it at a higher price, “so it’s a bubble.”

Dalio is one of many high-profile cryptocurrency skeptics. J.P. Morgan Chase & Co. /zigman2/quotes/205971034/composite JPM -0.07%  Chief Jamie Dimon grabbed headlines—and criticism—when he last week offered a brutal takedown of bitcoin, calling it a fraud and a bubble that’s “worse than tulip bulbs and won’t end well.”

Bridgewater manages around $160 billion. Since its founding by Dalio in 1975, the firm has produced net gains after fees of $49.4 billion, putting it at the top of the list of the world’s hedge-fund managers, according to London-based LCH Investments.

/zigman2/quotes/31322028/realtime
US : CoinDesk
16,807.18
-25.53 -0.15%
Volume: 0.00
Dec. 8, 2022 1:39a
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/zigman2/quotes/210598065/realtime
US : Dow Jones Global
33,597.92
+1.58 +0.0047%
Volume: 0.00
Dec. 7, 2022 5:22p
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/zigman2/quotes/210599714/realtime
US : S&P US
3,933.92
-7.34 -0.19%
Volume: 0.00
Dec. 7, 2022 5:22p
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/zigman2/quotes/205971034/composite
US : U.S.: NYSE
$ 131.50
-0.09 -0.07%
Volume: 11.74M
Dec. 7, 2022 4:00p
P/E Ratio
11.10
Dividend Yield
3.04%
Market Cap
$385.98 billion
Rev. per Employee
$512,134
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William Watts is MarketWatch's deputy markets editor, based in New York. Follow him on Twitter @wlwatts.

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