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Bitcoin Tumbles To Key Technical Level, Dalio Disses Diversification Into Digital Currency


After pushing up to two-month highs over the weekend, Bitcoin is accelerating lower this morning…

Bitcoin, January 2020

Bitcoin, January 2020

Source: Bloomberg - Click to enlarge

Breaking down from the 200DMA and testing the 100DMA…

Bitcoin, 2019-2020

(see more posts on Bitcoin, )
Bitcoin, 2019-2020

Source: Bloomberg - Click to enlarge

Cryptos are all lower today (and this week)…

Crypto currencies

Crypto currencies

Source: Coin360 - Click to enlarge

…but remain notably higher on the year…

There was no immediate catalyst for today’s drop but we note that CoinTelegraph’s Andrey Shevchenko reports that Bridgewater Founder Ray Dalio warned against holding Bitcoin, saying that it’s neither a medium of exchange nor a store of value.

Crypto currencies, Jan 2020

Crypto currencies, Jan 2020

Source: Bloomberg - Click to enlarge

Dalio was interviewed at the World Economic Forum in Davos, Switzerland, where he advised investors to hold a global and diversified portfolio in this market, while increasing their stake in stock markets.

While Dalio acknowledged recession concerns, he argued that “cash is trash” due to the government’s ability to print it at will — something he believes they will be forced to do during a market downturn. Due to this, jumping into cash just before the eventual market fall is ill-advised, according to Dalio.

The billionaire still cautions balance, advising investors to hold “a certain amount of gold” in their portfolios.

His stance on Bitcoin (BTC) was far more negative, however, noting that it is not currently functioning as money:

“There’s two purposes of money, a medium of exchange and a store hold of wealth, and Bitcoin is not effective in either of those cases now.”

He added that the volatility of Bitcoin makes it unattractive for serious investment, while something like Libra could be a better option. Elaborating on his preference of gold as a store of value, he noted that central banks are some of the largest metal holders:

“What are they going to hold as reserves? What has been tried and true? Are they going to hold Bitcoin digital cash… They’re going to hold gold. That is a reserve currency.”

Bitcoin Tumbles To Key Technical Level, Dalio Disses Diversification Into Digital Currency

image courtesy of CoinTelegraph

Bitcoin and the global economy

Bitcoin is often touted as “digital gold,” a reserve asset independent from government control.

But while many believe in the store of value thesis of Bitcoin, its performance so far has not indicated meaningful correlation with global markets. While it does appear to have slightly positive correlation to gold, the indexes are small enough that they can be attributed to coincidence.

These may still be teething problems due to the relative novelty of cryptocurrencies. As noted by Duke University professor Campbell Harvey, the sample size is still too small. Over thousands of years of history, even gold was not always a reliable safe-haven asset.

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Tyler Durden
ZeroHedges' Tyler Durden is the hero of Fight Club, the 1999 movie based on Chuck Palahniuk's novel that reflected Chuck's experience in the Cacophony Society Quote: "Goddamn it, an entire generation pumping gas, waiting tables, slaves with white collars. Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don’t need. We’re the middle children of history, man. No purpose or place. We have no Great War. No Great Depression. Our Great War’s a spiritual war… our Great Depression is our lives. We’ve all been raised on television to believe that one day we’d all be millionaires, and movie gods, and rock stars. But we won’t. And we’re slowly learning that fact. And we’re very, very pissed off." --> see more about Tyler on snbchf
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