Central Bank will not hold a large amount of Bitcoin? Dalio points out two major structural issues: does not meet reserve demand

Ray Dalio pointed out that while Bitcoin has the potential to be a store of value, due to transparency, technological and institutional risks, it is difficult to become a core reserve asset for Central Banks, and its positioning leans more towards an individual investment hedging tool.

Transparency and controllability become key, making it difficult for the Central Bank to include Bitcoin in core reserves.

Ray Dalio, the founder of Bridgewater Associates, recently stated in a podcast that despite Bitcoin's fixed supply and its gradual perception as a store of value, the likelihood of it being held on a large scale by Central Banks remains very low.

He pointed out that the problem is not whether Bitcoin has value, but that its structural characteristics do not meet the core requirements of the Central Bank for reserve assets.

Unlike gold, all Bitcoin transactions are recorded on a public blockchain, providing a high level of traceability. Governments can not only monitor the flow of transactions but may also intervene under certain circumstances.

For central banks that place a high value on asset sovereignty and non-interference, this transparency becomes a risk rather than an advantage. Dalio describes that the reason gold can long serve as a reserve asset is precisely because it is “difficult to control or manipulate,” which does not apply to Bitcoin.

Technical and institutional risks coexist, Bitcoin does not meet national reserve requirements.

In addition to trading transparency, Dalio also mentioned the potential technical risks of Bitcoin. He admitted that any technology-based system cannot completely eliminate the possibility of being “hacked, controlled, or replaced,” and although the probability is low, it cannot be ignored for national-level asset allocation.

He uses synthetic diamonds as an example to illustrate that even though natural diamonds are scarce, the market may still see structural substitutes that dilute the narrative of their value. This kind of uncertainty presents an unbearable risk for Central Banks that must maintain payment and settlement functions in the face of war, sanctions, or geopolitical conflicts.

Dalio emphasized that when Central Banks choose reserve assets, they consider not only the return or inflation-hedging capabilities but also whether they can maintain stability and non-interference in extreme situations, which is precisely the condition that Bitcoin currently struggles to meet.

Further Reading Can Bitcoin be used as Taiwan's reserve? The Central Bank points out 4 major risks: it's not suitable! 90% of central banks worldwide also have no intention of reserving.

Bearish on fiat currency but not entirely dismissive, Bitcoin is still positioned more as a personal asset.

It is worth noting that Dalio's reserved attitude towards Bitcoin is not based on confidence in fiat currency. He has repeatedly reiterated his “bearish view on fiat currency,” believing that major economies, including the United States, the United Kingdom, France, and China, are long-term eroding the value of their currencies through debt accumulation and monetary expansion.

For this reason, he still views gold and Bitcoin as alternative assets, suggesting that individual investors allocate about 5% to 15% of their portfolio as hedging tools. He also publicly stated that he “holds a small amount of Bitcoin,” but prefers gold in comparison.

In his view, individual diversification of investments and national reserve assets are two completely different levels; the former seeks to hedge against inflation and preserve asset value, while the latter must meet conditions of sovereignty, security, and institutional stability. This role difference also explains why Bitcoin has gradually secured a place in the private investment market, yet still struggles to become a core asset for large-scale allocation by central banks.