Dario, the world's largest hedge fund leader, just released his latest long article, "What I Think of Bitcoin", which the DeepQuant team grabbed and read immediately. The original text explained Dario's thinking on Bitcoin in detail. On the one hand, Dalio softened his previous prejudice against Bitcoin, thinking that Bitcoin is a wonderful invention; on the other hand, he raised various risks from the perspective of institutional entry, which is very valuable for reference.

This article is only a brief review of the Bloomberg website translated by DeepInsight, which is easier for readers to quickly grasp. The interpretation of the current media is extremely divisive. In the propaganda of traditional media, Dalio believes that Bitcoin is a "meaningless invention" and may lose most of its value. In the media promotion of the new currency circle, Dalio believes that Bitcoin is a "wonderful invention" and intends to set up a new fund to invest in Bitcoin. This is related to Dalio's writing style, which has always been both right and left, but for quantitative practitioners, independent and objective multi-perspective thinking is more important. Therefore, the DeepQuant team will translate this Bloomberg article in detail, and will interpret Dario's original text later, so stay tuned.

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Ray Dalio, Founder of Bridgewater Associates

On Thursday, January 28, Dario, the founder of the world's largest hedge fund Bridgewater, wrote in a 14-page daily newsletter column sent to clients that Bitcoin is "one hell of an invention." ), Bridgewater is considering using a new fund to invest in encrypted digital currencies in order to achieve wealth preservation for clients when fiat currencies depreciate.

“To have invented a new type of money through a system programmed into a computer, and that system has been in use for about 10 years and has exploded in popularity as a money and a storehold of wealth, is a remarkable achievement.” Da In a note to clients (later posted on Bridgewater's website), Leo wrote, "At this time, there aren't many gold-like alternatives in the midst of an ever-increasing demand for gold.

Like others, however, Dalio said he finds valuing digital assets challenging. While Bitcoin has the potential to make investors "very rich" and "disrupt the existing monetary system," there are risks. Cryptocurrencies can be vulnerable to hacking and restricted by governments looking to control the money supply, he said.

Dalio said he sees bitcoin as a "long-term option in a highly unknown future" and investing in it means realizing that bitcoin could lose about 80 percent. While not entirely supportive, Dalio is the most important of the hedge fund heavyweights to see a bright future for Bitcoin. Compared to Dalio, Paul Tudor Jones of Tudor Investment Corp. and Alan Howard, founder of Brevan Howard Asset Management (Alan Howard) is more bullish.

Alan Howard is part owner of One River Digital Asset Management and an investor in its cryptocurrency fund. He also owns Elwood Asset Management, which runs a stock index to track cryptocurrency and blockchain companies and provides some trading services, market analysis and technical support.

Paul Jones, who started buying bitcoin in May, called it a gold-like hedge against inflation and the "fastest horse" in the field of cash alternatives. Since then, the price of Bitcoin has tripled. Last week, BlackRock Inc., the world's largest asset manager, took its first step into cryptocurrencies. The firm notified regulators that cash-settled bitcoin futures would be eligible for investment in two of its funds.

Before the coronavirus pandemic, Dalio had been grappling with how to preserve wealth in a world of zero interest rates, debt monetization and calls for more fiscal spending. He said the global economy is undergoing a paradigm shift and ultimately investments that are profitable now, such as stocks and credit, will not perform well.

In 2019, he asked: "When most reserve currency bankers want to debase their currencies in a fiat currency system, what would be the next best currency or storehold of wealth?" and suggested gold as a way to reduce risk and increase returns. way.

In notes released Thursday, Dalio expanded on that thinking. Dalio said he felt compelled to "clarify my views on bitcoin," and warned clients he was not an expert.

Some of his remaining comments:

• Bitcoin has managed to move from the "valley of death" to something that could be of value.

• “Because there aren’t many of these gold-like financial storehold assets that can be kept privately, and the market is relatively small, the possibility exists that Bitcoin and its competitors can fill this growing demand.”

• Another risk is supply: While a limited number of bitcoins can be mined, nothing prevents new cryptocurrencies from being created, and “I think better coins will come along and replace bitcoin.”

• It would be naive to think that digital assets cannot be hacked at all when the Department of Defense cannot even protect its systems from hacking.

• If there are restrictions on the use of bitcoin, "then the demand for bitcoin will drop."

• “Don’t think the government is alarmist about the risk of banning bitcoin and its competitors, the more successful bitcoin is, the more likely it is in my opinion.”