Bitcoin is a bubble but gold is money says world’s biggest hedge fund manager

Gold is a better store of value, Ray Dalio of $160 billion Bridgewater tells CNBC

Bitcoin has climbed over 300% this year on speculation and expectation that it will continue to climb

Bitcoin is not a valid currency due to volatility and lack of spendingability says Dalio

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The manager of the world’s biggest hedge fund, Ray Dalio has declared his preference for gold over bitcoin.

Earlier this week Dalio, of $160bn Bridgewater Associates, labelled bitcoin ‘a bubble’.Dalio believes the 300% plus rise in price of the most popular cryptocurrency is down to speculation over its expected price rise, as opposed to confidence in its future role as a currency.

Dalio’s comments come less than a week after J.P. Morgan’s Jamie Dimon said bitcoin is worse than tulip bulbs and a month after Professor Robert Shiller said it was the best example of a bubble right now.

Bitcoin had a tough week last week, taking a hit following an announcement by Chinese authorities to shut down exchanges. However, it has since begun to recover.

It’s strong performance this year has prompted many experienced investors and economists to call it out for what it seems to be a bubble.

Bitcoin is not a store of value, it’s a bubble

It’s not an effective store of wealth because it has volatility to it, unlike goldBitcoin is a highly speculative market. Bitcoin is a bubble.

For Dalio speaking in an interview withCNBC, bitcoin is in too speculative a market for it to become an effective store of wealth. This has long been the case with the cryptocurrency. This is a problem that may well continue and may prevent it becoming astore of value.

Why will this continue?Back in August Dalio expressed concern over investors becoming complacent in markets and how this can then leadto volatility:

People adapt to the circumstances they have experienced and are then surprised when the future is different than the past. In other words, mostpeople are inclined to assume that the circumstances they have recently encountered will persist, which leads them to change what they are doing to be consistent with that recently experienced environment.

This is what we are now seeing with bitcoin. Traders have pretty much only seen bitcoin rise over the last couple of years. This has come with high levels of volatility, but overall the price has gone up. For bitcoin investors, this is now thenorm. This is what they have come to expect.

So they keep pushing the price (and volatility) up because, for now, what on earth else would possible happen?

When asked if bitcoin is in a bubble, evangelists are offended you could ask such a thing. Following Professor Shiller’s comments about bitcoin’s bubbliness we notedan articleon CoinTelegraph which was about as far from a far economic argument for something not being in a bubble as you could get:

Looking at a chart of the growth of sectors that experienced bubbles since 1990, there is a familiar pattern. However, Bitcoin skyrockets off and away from that chart, showing no correlation with the tech bubble, the homebuilders bubble or the biotech bubble.

Sobecause bitcoin skyrockets off the chart then it’s not in a bubble.