Why Ray Dalio believes Bitcoin will never be a “reserve currency”

[fuguebtc]

No it does not make any sense. It is clear that you didn't read a single post here before you wrote your response. Bitcoin's volatility is pretty low these days and a reserve currency does not tie the economy of the country to it. It is a reserve, not the working liquidity of a country. Its short-term volatility is irrelevant for a long term outlook.

None of this is true, stop writing nonsense. Bitcoin's volatility is pretty low these days and other reserve currencies are also quite volatile. Bitcoin is slightly more volatile, but there is no arbitrary cutoff point at which we say there is too much volatility.

Bitcoin fell from $126k to $82k, or 32% in less than 2 months, and from $109k to $74k in April just because of Trump's trade war. And you call that level of volatility quite low? LOL

Bitcoin's volatility has decreased compared to years ago, but is still significantly greater than other assets like stocks and gold.

Short-term volatility has nothing to do with bitcoin's long-term prospects, but what governments need is a stable asset because their goal is to use them to protect the economy in case of emergency. They do not seek speculative assets and profits that would put their economy at risk.

A state level reserve would be a natural precursor to a national level reserve. It gives the whole thing more credibility and builds up a foundation for it to become a national reserve. Mind you Texas just bought $10 million worth of Bitcoin but that is pretty low. When states start having a reserve in hundreds of millions or billions then the game is on.

State reserves have nothing to do with federal reserves. For example, gold is the largest asset of the US Federal Reserve, but most states do not own gold. Only a few states have gold reserves, but their holdings are very small. Instead, they all hold a large portion of US government bonds.

[Abiky]

They don't need to manipulate it and make it stable because to be the global reserve currency, stability is what bitcoin needs to achieve if that is its goal.

That's why I never want bitcoin to become a safe haven like gold, because then it will become stable and the returns will also decrease significantly. As an investor I really don't want that to happen to bitcoin, I don't want it to become stable. But it seems like many people don't understand that, they always want bitcoin to become a national reserve, to become a safe haven like gold.

What bitcoin needs to achieve is global acceptance and adoption, it doesn't need to become a currency or a national reserve asset.

Wrong. Gold has never been stable (less volatile than Bitcoin), yet it became the world's reserve currency decades ago. What's stopping countries from adopting BTC as the new reserve currency? Bitcoin's volatility can be reduced if more liquidity enters the market. With "Wall Street" in the game, a bright future awaits for BTC as "Digital Gold". Governments are even considering adding Bitcoin to their reserves.

The sky is the limit to how far will the cryptocurrency go. Ray Dalio is just skeptical about Bitcoin. Same as a few other people who think like him (mainly dinosaurs such as Warren Buffett, Elizabeth Warren, Jim Cramer, etc). They will change their minds once BTC becomes a integral part of the global financial system. It should only be a matter of time before this happens. Just my two sats.

[d5000]

There is an even simpler solution, a small adjustment in the way that things are disclosed and the problem solves itself. So instead of announcing that they intend to acquire some number of Bitcoin to expand the reserve, they only do so after the fact.

To be able to control information about the purchases / sales It's a requirement that the Central Bank uses some privacy techniques like those I mentioned. Otherwise Arkham and other chain analysis companies would discover the transactions before it would be opportune, and it would probably move the market.

I mean what would they do, threaten to dump if something got implemented or something didn't get implemented? I don't think that there would be coordination of this kind but it is possible.

In the thread I linked in the other post already I made a thought experiment. What if Bitcoin Core wants to add Monero or MimbleWimble type privacy, but this would need a soft fork, and all Central banks of FATF members would cooperate to "prevent" that fork at all means, or at least to make it the canonical Bitcoin?

Soft forks are "soft" (i.e. new nodes tighten the rules but do not impose their conditions on old nodes) but they are also a type of fork, this means that if certain conditions are met, miners can fork away from the chain if they don't agree with the new rules. When there are transactions valid by the old rules but not the new, then any blocks that contains a transaction made with funds transferred by a transaction which was valid with the old rules triggers the fork.

So if the topic is contentious in the Bitcoin community, then a single group of actors with large wallets (the central banks, in this case) who would take a clear stance on the fork could prevent the fork by threatening to sell the coins of the "privacy fork" or at least insinuate to do so. Miners could then not take the privacy side but the FATF side if they fear a dump.

This can however be prevented if the Bitcoin community has still a strong commitment to privacy and the soft fork is unanimously supported. Like when Taproot was added for example.

Most likely if volatility becomes extremely low they would write stuff like Bitcoin is not interesting anymore, its value won't appreciate, it is too stable. There is no winning with such type of people.

Imagine volatility is low but the trend is still bullish, even if only 5-10% per year. Bitcoin would then become a very interesting asset to simply "save" value from inflation for "common" people.

[₿itcoin]

source link

Transparency is an essential feature that can eliminate counterparty risk as well as covert agreements.
Those who believe in an honest and strong currency certainly expect this transparency to be included.
Governments are currently creating debt-based, inflation-driven paper currencies and complex derivatives.
so a nonfiat buffer like bitcoin which is also decentralized could address the complexities of relying on fiat

source link

The volatility that Bitcoin is currently experiencing is largely indicative of its early stages.
As we move into the future, volatility will likely fall off over time as universal acceptance become greater.
The shift in its fixed supply and global demand is unprecedented.


Ray Dalios decision to hold Bitcoin sends an important signal. It shows, for example, that sophisticated investors, such as macro-hedge funds, are also seeing the potential of Bitcoin as valuable.

Now  there is no urgent need for major countries to make  bitcoin  reserve ready. The real success of bitcoin is in its ability to serve as a safe haven for a strong currency outside of state control. In a few decades  when more people &  perhaps some countries take a closer look at this economy, Bitcoin will potentially be able to erase the traces of  old skepticism

[X-ray]

They don't need to manipulate it and make it stable because to be the global reserve currency, stability is what bitcoin needs to achieve if that is its goal.

That's why I never want bitcoin to become a safe haven like gold, because then it will become stable and the returns will also decrease significantly. As an investor I really don't want that to happen to bitcoin, I don't want it to become stable. But it seems like many people don't understand that, they always want bitcoin to become a national reserve, to become a safe haven like gold.

What bitcoin needs to achieve is global acceptance and adoption, it doesn't need to become a currency or a national reserve asset.

Wrong. Gold has never been stable (less volatile than Bitcoin), yet it became the world's reserve currency decades ago. What's stopping countries from adopting BTC as the new reserve currency? Bitcoin's volatility can be reduced if more liquidity enters the market. With "Wall Street" in the game, a bright future awaits for BTC as "Digital Gold". Governments are even considering adding Bitcoin to their reserves.

The sky is the limit to how far will the cryptocurrency go. Ray Dalio is just skeptical about Bitcoin. Same as a few other people who think like him (mainly dinosaurs such as Warren Buffett, Elizabeth Warren, Jim Cramer, etc). They will change their minds once BTC becomes a integral part of the global financial system. It should only be a matter of time before this happens. Just my two sats.

Agreed with your take, gold has never been that stable, it's volatile but less volatile. I don't know why people call gold stable while it truly isn't. I remember gold dropped massively in April 2013 yet people still call it stable.

I think it's more of people don't want to accept the fact that there's no such thing as stable asset that truly retains its value and never goes down in this world.

If we compare the chart of bitcoin (from 2009) to gold (from 1990s till today), there's not much difference volatility wise.

[Smack That Ace]

They don't need to manipulate it and make it stable because to be the global reserve currency, stability is what bitcoin needs to achieve if that is its goal.

That's why I never want bitcoin to become a safe haven like gold, because then it will become stable and the returns will also decrease significantly. As an investor I really don't want that to happen to bitcoin, I don't want it to become stable. But it seems like many people don't understand that, they always want bitcoin to become a national reserve, to become a safe haven like gold.

What bitcoin needs to achieve is global acceptance and adoption, it doesn't need to become a currency or a national reserve asset.

Wrong. Gold has never been stable (less volatile than Bitcoin), yet it became the world's reserve currency decades ago. What's stopping countries from adopting BTC as the new reserve currency? Bitcoin's volatility can be reduced if more liquidity enters the market. With "Wall Street" in the game, a bright future awaits for BTC as "Digital Gold". Governments are even considering adding Bitcoin to their reserves.

The sky is the limit to how far will the cryptocurrency go. Ray Dalio is just skeptical about Bitcoin. Same as a few other people who think like him (mainly dinosaurs such as Warren Buffett, Elizabeth Warren, Jim Cramer, etc). They will change their minds once BTC becomes a integral part of the global financial system. It should only be a matter of time before this happens. Just my two sats.

Agreed with your take, gold has never been that stable, it's volatile but less volatile. I don't know why people call gold stable while it truly isn't. I remember gold dropped massively in April 2013 yet people still call it stable.

I think it's more of people don't want to accept the fact that there's no such thing as stable asset that truly retains its value and never goes down in this world.

If we compare the chart of bitcoin (from 2009) to gold (from 1990s till today), there's not much difference volatility wise.

Gold is considered a stable asset because compared to other financial assets, gold tends to retain its value better.  Also, it is considered stable and safe because during most economic crises and recessions, most speculative assets like bitcoin and stocks get dumped heavily. Meanwhile, gold tends to move in the opposite direction and provides safety for investors. When people say it is stable, they don't mean its price never changes, they mean it is more stable than other assets.

[Abiky]

Gold is considered a stable asset because compared to other financial assets, gold tends to retain its value better.  Also, it is considered stable and safe because during most economic crises and recessions, most speculative assets like bitcoin and stocks get dumped heavily. Meanwhile, gold tends to move in the opposite direction and provides safety for investors. When people say it is stable, they don't mean its price never changes, they mean it is more stable than other assets.

Well, Gold has been trusted for centuries as a reliable store of value. Bitcoin is still new to the world. It's going to take some time before BTC "stabilizes".

For now, most investors will look into Gold as a safe haven during times of crisis. But I believe the tables will turn in the future, as Bitcoin's use case as "Digital Gold" expands. There will be a time when BTC's market price will move on its own regardless of what happens with other assets (particularly tech stocks). It's not a question of "IF" but rather "WHEN". Bitcoin becoming the reserve currency of the world would be a dream come true. Ultimately, governments have the power to decide whenever to let this happen or not. If they feel Fiat's dominance is threatened, they could go "nuclear" on Bitcoin. We can't predict the future, so here's hoping for the best.

[YOSHIE]

Greetings to you all my fellow Bitcoin talkers. I don't know if anyone has came across this on Twitter, where Ray Dalio tweeted this above.

Well, if you talk about Ray Dalio's statement, I have also read him saying: Ray Dalio Still Owns Bitcoin, but Says Traceability and Quantum Threat Are Concerns

He has reasons for that in short:

“I think the problem of bitcoin is it's not going to be a reserve currency for major countries because it can be tracked and it could be, conceivably with quantum computing controlled, hacked, and so on and so forth," Dalio said, stressing governments will not adopt financial products that record in a public and permanent way.

For me, what Ray Dalio said makes sense and can be accepted with common sense, why can't Bitcoin be used as a reserve currency.

[Dogedegen]

Bitcoin fell from $126k to $82k, or 32% in less than 2 months, and from $109k to $74k in April just because of Trump's trade war. And you call that level of volatility quite low? LOL

Bitcoin's volatility has decreased compared to years ago, but is still significantly greater than other assets like stocks and gold.

It is extremely low volatility for what it is, yes. If you don't have the capacity to read more data and see that things regularly crash much more than that in the same time frame, then that is on you. Nothing I say can save your empty brain.

A state level reserve would be a natural precursor to a national level reserve. It gives the whole thing more credibility and builds up a foundation for it to become a national reserve. Mind you Texas just bought $10 million worth of Bitcoin but that is pretty low. When states start having a reserve in hundreds of millions or billions then the game is on.

State reserves have nothing to do with federal reserves. For example, gold is the largest asset of the US Federal Reserve, but most states do not own gold. Only a few states have gold reserves, but their holdings are very small. Instead, they all hold a large portion of US government bonds.

Congratulations for completely missing the point of the argument while at the same time thinking you are being smart.  

There is an even simpler solution, a small adjustment in the way that things are disclosed and the problem solves itself. So instead of announcing that they intend to acquire some number of Bitcoin to expand the reserve, they only do so after the fact.

To be able to control information about the purchases / sales It's a requirement that the Central Bank uses some privacy techniques like those I mentioned. Otherwise Arkham and other chain analysis companies would discover the transactions before it would be opportune, and it would probably move the market.

I think as long as they prevent front running in any way that it is doable. What is obviously not possible is something like a huge announcement of wanting to buy an extremely large amount of coin, like some proposals in the USA. Everyone in the world would want to front run such a deal.

In the thread I linked in the other post already I made a thought experiment. What if Bitcoin Core wants to add Monero or MimbleWimble type privacy, but this would need a soft fork, and all Central banks of FATF members would cooperate to "prevent" that fork at all means, or at least to make it the canonical Bitcoin?

Soft forks are "soft" (i.e. new nodes tighten the rules but do not impose their conditions on old nodes) but they are also a type of fork, this means that if certain conditions are met, miners can fork away from the chain if they don't agree with the new rules. When there are transactions valid by the old rules but not the new, then any blocks that contains a transaction made with funds transferred by a transaction which was valid with the old rules triggers the fork.

So if the topic is contentious in the Bitcoin community, then a single group of actors with large wallets (the central banks, in this case) who would take a clear stance on the fork could prevent the fork by threatening to sell the coins of the "privacy fork" or at least insinuate to do so. Miners could then not take the privacy side but the FATF side if they fear a dump.

This can however be prevented if the Bitcoin community has still a strong commitment to privacy and the soft fork is unanimously supported. Like when Taproot was added for example.

I see what you are getting at. I think it would be worthwhile to do get some of these features going ahead of time so that we front run some of the opposition. Regardless of that, I believe that what you wrote could be a scenario in the future as in one of the big tests of Bitcoin. Something similar than the fork wars but much more important and more harder to win of course. I don't think that failing to pass such a test would be extremely bad since if you remove the identity of that actors in the opposition, then it is simply Bitcoin consensus working if you get me. Many entities and community members banding together today can also prevent proposed features so just because it would be the central banks that are doing it does not mean that Bitcoin has failed. Still, winning such a battle would be even better though.

Most likely if volatility becomes extremely low they would write stuff like Bitcoin is not interesting anymore, its value won't appreciate, it is too stable. There is no winning with such type of people.

Imagine volatility is low but the trend is still bullish, even if only 5-10% per year. Bitcoin would then become a very interesting asset to simply "save" value from inflation for "common" people.

I don't think that price action is possible in the heavily manipulated and unstable world that we live in. It is probably only possible with a highly manipulated market where the supply or trading is tightly controlled. Bitcoin is entirely free and since global powers are fighting each other all the time, it is bound to experience all kinds of shocks.

He has reasons for that in short:

“I think the problem of bitcoin is it's not going to be a reserve currency for major countries because it can be tracked and it could be, conceivably with quantum computing controlled, hacked, and so on and so forth," Dalio said, stressing governments will not adopt financial products that record in a public and permanent way.

For me, what Ray Dalio said makes sense and can be accepted with common sense, why can't Bitcoin be used as a reserve currency.

No it does not, he literally just wrote 2 things that he read recently in some random media articles. That's why he said so on and so forth, because he does not really have any real arguments. You guys need to learn how to read between the lines and stop appealing to authority. Just because he is rich that does not mean he knows what he is talking about here.

[d5000]

I think as long as they prevent front running in any way that it is doable. What is obviously not possible is something like a huge announcement of wanting to buy an extremely large amount of coin, like some proposals in the USA. Everyone in the world would want to front run such a deal.

I agree that avoiding frontrunning should be done at all cost. But even after the fact of a purchase the markets can be shaken enough to add volatility the Central Bank would like to prevent. Let's say they start with relatively low but regular purchases, planning to increase the number. Chain analysis reveals the plan, and a bubble is triggered. The Central Bank could then buy overpriced because their later buys would be "frontrun".

So I think the best thing would be to completely avoid any information about future and past purchases.

Of course proposals like "the Central Bank should purchase 1 million Bitcoin" are extremely problematic. But an authorization from the Legislative may be needed in some countries. It can in this case of course be worded like "buy UP TO a million Bitcoins", with no explicit minimum.

I think it would be worthwhile to do get some of these features going ahead of time so that we front run some of the opposition.

Such changes are quite slow. But indeed it would be desirable to improve privacy in the next 5 years or so, before the Central Banks get too much

I don't think that failing to pass such a test would be extremely bad since if you remove the identity of that actors in the opposition, then it is simply Bitcoin consensus working if you get me.

Agree, even if I also would like to prevent that. And perhaps failing once would not mean to fail forever, the soft fork could be attempted at a later stage if the consensus changes.

I don't think that price action is possible in the heavily manipulated and unstable world that we live in. It is probably only possible with a highly manipulated market where the supply or trading is tightly controlled. Bitcoin is entirely free and since global powers are fighting each other all the time, it is bound to experience all kinds of shocks.

I don't think there are other rules for Bitcoin than for other assets like gold and silver. Gold or silver-style volatility would be already enough probably to make Bitcoin interesting for broader parts of the population to "save value".

Much lower volatility than gold is probably very far away, but also possible if we really advance towards a "world currency" or "Bitcoin standard". No centralized control would be needed, the simple fact that (as for every currency) there would be "exchanges" all the time not only for fiat currencies, but for all kinds of goods and services would boost liquidity to extreme levels where severe crashes or FOMO episodes would be very difficult to achieve even for the biggest whales.

[avp2306]

I think as long as they prevent front running in any way that it is doable. What is obviously not possible is something like a huge announcement of wanting to buy an extremely large amount of coin, like some proposals in the USA. Everyone in the world would want to front run such a deal.

I agree that avoiding frontrunning should be done at all cost. But even after the fact of a purchase the markets can be shaken enough to add volatility the Central Bank would like to prevent. Let's say they start with relatively low but regular purchases, planning to increase the number. Chain analysis reveals the plan, and a bubble is triggered. The Central Bank could then buy overpriced because their later buys would be "frontrun".

So I think the best thing would be to completely avoid any information about future and past purchases.

Of course proposals like "the Central Bank should purchase 1 million Bitcoin" are extremely problematic. But an authorization from the Legislative may be needed in some countries. It can in this case of course be worded like "buy UP TO a million Bitcoins", with no explicit minimum.

That could be the best action to do especially if they decide to make their accumulation became more discreet to avoid traceability and possibilities of intervention. But the question is does they really want to do it silently? Knowing that these people want to manipulate and use their fame to dominate.

But if they are really for adoption and want to silent their past and future purchases then its good since they can provably avoid that have certain impression that their purchase is a signal of something that can possibly move the market. But if they can really do everything in silently then provably that they can safeguard their investment for any speculative bubbles and other potential manipulations of bad actors that might intercept their current also future actions.

[Danica22]

Wrong. Gold has never been stable (less volatile than Bitcoin), yet it became the world's reserve currency decades ago. What's stopping countries from adopting BTC as the new reserve currency? Bitcoin's volatility can be reduced if more liquidity enters the market. With "Wall Street" in the game, a bright future awaits for BTC as "Digital Gold". Governments are even considering adding Bitcoin to their reserves.

The sky is the limit to how far will the cryptocurrency go. Ray Dalio is just skeptical about Bitcoin. Same as a few other people who think like him (mainly dinosaurs such as Warren Buffett, Elizabeth Warren, Jim Cramer, etc). They will change their minds once BTC becomes a integral part of the global financial system. It should only be a matter of time before this happens. Just my two sats.

Yes, gold is less volatile, it is not stable. But in addition to needing to be more stable, bitcoin also needs to ensure that it will no longer be dumped in an unstable economy if it wants to become a reserve currency. No government wants to add a currency that is being dumped in an unstable economy to its national reserves, because that is when they need it most. So in my opinion, bitcoin has a long way to go to achieve that goal. This will not be as easy as many investors think.

[Dogedegen]

I agree that avoiding frontrunning should be done at all cost. But even after the fact of a purchase the markets can be shaken enough to add volatility the Central Bank would like to prevent. Let's say they start with relatively low but regular purchases, planning to increase the number. Chain analysis reveals the plan, and a bubble is triggered. The Central Bank could then buy overpriced because their later buys would be "frontrun".

Why would they want to prevent upward volatility? If they announce that they have bought a large position of Bitcoin I expect that this would have positive price pressure, thereby increasing the value of the reserves right away in the short term. In my view the idea of reserves is not to have something that has almost no volatility or price appreciation because in that case they would be losing value over time due to inflation.

So I think the best thing would be to completely avoid any information about future and past purchases.

I don't think that a government can refuse to disclose information about past purchases? That seems very nontransparent and undemocratic? For all we know they could have stolen that money instead. Some kind of auditing is needed, and where there is information and people involved it will leak eventually.

Of course proposals like "the Central Bank should purchase 1 million Bitcoin" are extremely problematic. But an authorization from the Legislative may be needed in some countries. It can in this case of course be worded like "buy UP TO a million Bitcoins", with no explicit minimum.

Yeah that is the minimum needed but even in this case people will try to front run it. Even if the legislation does not specify when it will start or how much is the minimum I expect that many entities will try to front run this in any case. So it is very difficult to do it properly.

I don't think that failing to pass such a test would be extremely bad since if you remove the identity of that actors in the opposition, then it is simply Bitcoin consensus working if you get me.

Agree, even if I also would like to prevent that. And perhaps failing once would not mean to fail forever, the soft fork could be attempted at a later stage if the consensus changes.

I agree too, we should not make the central banks a sort of bogey man because from the perspective of the Bitcoin network they are not different from any other participant. Of course they will fight against some proposals, similarly every entity right now fights against some proposals and fights for others. Unfortunately objectivity is rare so in most cases the entities are fighting for proposals that they think would benefit them directly or indirectly through value appreciation.

I don't think there are other rules for Bitcoin than for other assets like gold and silver. Gold or silver-style volatility would be already enough probably to make Bitcoin interesting for broader parts of the population to "save value".

Much lower volatility than gold is probably very far away, but also possible if we really advance towards a "world currency" or "Bitcoin standard". No centralized control would be needed, the simple fact that (as for every currency) there would be "exchanges" all the time not only for fiat currencies, but for all kinds of goods and services would boost liquidity to extreme levels where severe crashes or FOMO episodes would be very difficult to achieve even for the biggest whales.

Correct me if I am wrong but I am unable to find a better source for gold's volatility. SPDR Gold Shares (GLD) is one of those large ETFs that are designed to track the price of gold minus some fees. According to this source https://www.alphaquery.com/stock/GLD/volatility-option-statistics/30-day/historical-volatility/ gold has recently had an annualized volatility of around 35%, unless I misunderstood this. According to this recent article https://www.coindesk.com/markets/2025/11/28/bitcoin-and-s-and-p-500-year-end-bull-run-loading-vol-metrics-say-yes? Bitcoin's volatility peaked at just a bit less than half of that.

Volmex's options-based 30-day bitcoin implied volatility index, BVIV, dropped back to an annualized 51%, reversing a sharp spike to nearly 65% over five days leading to Nov. 21, when bitcoin's price plunged from around $96,000 to nearly $80,000.

I don't see how anyone could complain about this and call it extremely volatile. It is not supposed to be less volatile than gold which has been used for thousands of years and is the only real reserve asset of the world just yet. If it did already what would that say about gold? On the volatility metric it is doing pretty fine for now.  I think I made the fair comparison here as I chose 30day measures in both cases.

Yes, gold is less volatile, it is not stable. But in addition to needing to be more stable, bitcoin also needs to ensure that it will no longer be dumped in an unstable economy if it wants to become a reserve currency. No government wants to add a currency that is being dumped in an unstable economy to its national reserves, because that is when they need it most. So in my opinion, bitcoin has a long way to go to achieve that goal. This will not be as easy as many investors think.

This is nonsense that is never going to happen. Nobody can prevent someone else from dumping Bitcoin whenever they want. If some government wants to dump it when their economy is in trouble, that is their choice. Somebody else's choice does not diminish what Bitcoin is, its functions even as a reserve assets and even if such dumping does affect the market price.

[EarnOnVictor]

Here comes the powerful words of a constructive person, unlike those who like to make noise online. His words are also neutral enough , and are void of dislikes or biases.

As much as we want more adoptions and relevance for Bitcoin, we should also face the reality. One of the realities is that Bitcoin is not created and structured the way the government wants, to warrant committing fully to it as a reserve. This will always be an issue, or at least a serious concern for them.

The government always wants to exert control and weigh their risks in case of a hijack. Bitcoin will not offer them that, and hence, the believe to tread carefully.