Ray Dalio: "If AI Bubble Bursts, Gold Will Outperform Bitcoin (BTC)"

▲ Gold, Bitcoin (BTC)/AI Generated Image

A warning has emerged that Bitcoin (BTC) could be outranked by gold in the race for safe havens during an artificial intelligence bubble collapse. Billionaire investor Ray Dalio argued that 5-15% of a portfolio should be allocated to gold, citing its strong defensive capabilities during stock market downturns.

According to crypto news outlet Coingape on August 4 (local time), Ray Dalio, founder of Bridgewater Associates, evaluated gold as a better diversification asset than Bitcoin on The Diary of a CEO podcast. He pointed out that rising interest rates and increased leverage among individual investors are signs of a bubble in the artificial intelligence industry. He argued that if AI-related stocks fall, investors will look for alternative assets like gold and Bitcoin, but gold, which tends to rise in price when other assets collapse, would be more advantageous.

Dalio stated, “If most people want a certain store of value, they should include gold in their investment portfolio at 5-15%.” He acknowledged that Bitcoin could also be an alternative during a downturn in AI-related stocks but cited hacking risks and potential government surveillance as weaknesses. He explained that gold is relatively free from the technological and regulatory risks associated with digital assets.

Recent market trends have also shown gold's superiority. The XAU/BTC ratio, which indicates the relative value of Bitcoin against gold, rose by 7.5% from July 21 to August 4. During the same period, gold surpassed $4,000, while Bitcoin fell from $66,000 to $63,700. Amid the cessation of military clashes between the US and Iran and increased expectations for peace talks, buying interest in gold outpaced Bitcoin. However, a decline in the Average Directional Index (ADX) indicated that the upward trend of XAU/BTC was not strong.

Analysis also suggested that Bitcoin is at a crossroads for a short-term rebound. A short-term trend can only be considered bullish if it closes above its 50-day moving average of $63,309 for three consecutive days, with the next resistance level suggested at the 150-day moving average of $69,537. Conversely, indicators showing long-term trends still pointed to bearishness. The net inflow of $170 million into Bitcoin spot ETFs on August 3 was cited as a variable supporting the recovery of institutional demand.

Dalio's warning focuses on the possibility that even if a correction in AI-related stocks begins, funds from risk assets may not solely concentrate on Bitcoin. Gold maintains its advantage with proven price defense during market shocks, while Bitcoin needs to recover key moving averages based on institutional fund inflows to create a turning point in its competition with gold.

[Article Summary]

-Ray Dalio predicted that if the AI bubble bursts, gold could become a stronger diversification asset than Bitcoin.

-Dalio stated that gold should constitute 5-15% of an investment portfolio, and warned against the risks of Bitcoin hacking and government surveillance.

-The XAU/BTC ratio increased by 7.5% from July 21 to August 4, indicating gold's relative superiority.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*