📍 Austin, TX, USA. on 9th Jun 2022 at 00:00
3 mins read
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Bridgewater is the world’s biggest hedge fund and has $140 billion in assets under management. It dominated the legacy economy and is now reportedly planning to stamp its authority on crypto.
The hedge fund is planning to back an external crypto investment vehicle, Coinbase reported, although it has “no plans” to directly buy crypto assets.
The revelation that Bridgewater is looking to invest in crypto shows that it is serious about digital assets. It is likely to be the first step in a long journey that will see big institutions attempt to become big players in the decentralized markets.
A source told Coinbase: “Bridgewater is looking to get involved. They are doing serious diligence: liquidity, service providers, and what not.”
Last year, Bridgewater founder Ray Dalio revealed that he had made a personal investment in digital assets and said he has “some Bitcoin”.
In a blog written in January 2022, Dalio described Bitcoin as “one hell of an invention” and a “type of alchemy” like the existing credit-based monetary system that ”makes money out of little or nothing”.
He wrote: “It, like the making of credit that made bankers rich starting with the Medicis around 1350, is making its inventors and those who got in on it early very rich and has the potential to make many more people very rich and to disrupt the existing monetary system. Those who have built it and supported the dream of making this new kind of money a reality have done a fabulous job of sustaining that dream and moving Bitcoin (by which I mean it and its analogous competitors) into being an alternative gold-like asset.”
In the same blog, Bridgewater analysts went on to say “the Bitcoin price roller-coaster ride could continue for some time”. They warned that “broader Bitcoin adoption is also challenged by lack of sufficient regulatory clarity around operational issues and questions around future resiliency”.
“Overall, it’s clear that Bitcoin has features that could make it an attractive storehold of wealth; it also has proven resilient so far,” the analysts wrote. “However, we have to acknowledge that this financial vehicle is only a decade old. In absolute terms and vis-a-vis established storeholds of wealth such as gold, how will this digital asset fare going forward?
“Future challenges may still come from quantum computing, regulatory backlash, or issues we haven’t even determined yet. Even if none of these materialize, Bitcoin, for now, feels more to us like an option on a potential store of wealth.”
Of these threats, quantum computing is the most serious. These super-powerful computers will be able to crack Bitcoin’s encryption and bring the blockchain tumbling down - potentially bringing the world economy to its knees at the same time.
Blackrock, the world’s 16th largest hedge fund, issued its own blog on March 24 that referred to crypto in the context of the Ukraine war.
Larry Fink, Blackrock chairman, wrote: “The war will prompt countries to re-evaluate their currency dependencies. Even before the war, several governments were looking to play a more active role in digital currencies and define the regulatory frameworks under which they operate.”
Fink discussed the Fed’s digital dollar study and said that “a global digital payment system, thoughtfully designed, can enhance the settlement of international transactions while reducing the risk of money laundering and corruption”.
“As we see increasing interest from our clients, BlackRock is studying digital currencies, stablecoins, and the underlying technologies to understand how they can help us serve our clients,” Fink wrote.