Ray Dalio Is Completely Wrong About Bitcoin (My Response)

0:00Hello everyone, Ray Dalio recently had negative things to say about Bitcoin. Alex Carp believes that AI companies could be nationalized by the U.S. government, and we're going to highlight the potential next great hedge fund manager that not a lot of people are talking about yet. We're alive today from the desk of Anthony Pompley on it. Before we get into today's episode, I need your help. We currently have 44,679 subscribers on YouTube, but I want a million. Hit the subscribe button and let's get into today's show. Ray Dalio was recently interviewed on the all-in podcast earlier this week. At one point, he laid out his bare case against Bitcoin. That's right, Dalio, for some reason, all of a sudden, doesn't like Bitcoin. He said that central banks don't want Bitcoin. He said governments can track Bitcoin. He said that Bitcoin is a small controlled market, and he said that quantum computers will crack Bitcoin. Take a listen to what Ray had to say here. Okay, so Bitcoin does not have privacy.

1:01Any transactions can be monitored, and then indirectly, perhaps, controlled. Central banks are not going to want to buy Bitcoin and being able to hold it. So it's not just individuals, it's institutions, and so on, but most, and central banks, so that there are attributes of that. There has been some question or thoughts of the development of new technologies, like quantum computing, and so on. Can there be issues regarding that? Then there's who owns it, and what are the other exposures that they have in their portfolio? It tends to have a pretty high correlation with the tech stocks, so from an ownership, you know, just the supply demand is affected by if somebody gets squeezed in one thing, they sell something, whatever else they have. So there are those dynamics.

2:01It's a long way, and it's a relatively small market that's a relatively controllable market. I think a lot of attention has been given to Bitcoin, but as a money, it's small in relationship to gold, and so those are the dynamics. Now I respect Radalia. He built Bridgewater into the world's largest hedge fund. That's no easy feat. His framework for understanding debt cycles, honestly, I think it's some of the best work anyone's done. It's genuinely brilliant. But his analysis of Bitcoin, it stuck back in 2017. He's applying 20th century assumptions to a 21st century monetary network, and the data tells a very different story than what his current narrative is. So, to be fair to him though, Dallio does make some points that Bitcoiners should take seriously rather than just dismiss offhand. He says that Bitcoin does trade like a risk asset in the short term. I agree with that. In periods of liquidity stress, Bitcoin has been sold first, and people ask questions later. It's correlation with tech stocks remains elevated.

3:03We've been talking about that for weeks now. And Dallio's observation that Bitcoin acts more like a liquidity gauge than a fear hedge is supported by a recent price action. I think all that's fair. The second thing that he says is that gold has a millennia of lindia effect. That's true. Bitcoin's only 17 years old. Gold's been around and been a store of value for over 5,000 years. Nightig's own analysis concedes that gold has the edge on societal adoption and acceptance. And it is larger in total value and it's less volatile. Bitcoin's annualized volatility is still about 52%. Gold is only 15 and a half percent. That gap is narrowing, but it still hasn't closed. And then Dallio talks about the fact that the major central banks are not buying Bitcoin. That's true. The Fed and ECB have explicitly said no. Smaller nations and sub-sovereign entities, they're adopting Bitcoin. But the two institutions that anchor the global monetary system, they remain skeptical. And that matters. Now Dallio's debt cycle framework is correct. And again, it's one of the best I've seen. U.S. deficit hit 6% of GDP.

4:05National debt is over 38 trillion. The Fed's cut rates 6 times in September 2024 and it resumed balance sheet expansion. Money supply expansions coming and Dallio's rate that the environment rewards hard assets. His error, though, is in assuming gold is the only one that benefits. Remember, Ray Dallio is one of the great macro thinkers of our time. His debt cycle framework is a central reading. His instinct to hold non-sovereign stores of value in this environment is correct. But his analysis on Bitcoin, it's frozen in time. He's arguing against the Bitcoin of 2018. Before the ETFs, before the strategic Bitcoin reserve, before central banks started testing Bitcoin allocations, before BIP 360, before $95 billion in ETF AUM, before 193 public companies added it to their balance sheets, and before hash rate crossed one Zeta hash. The data doesn't support central banks don't want Bitcoin. The data shows a sovereign adoption curve that it's accelerating. The data doesn't support Bitcoin can be controlled. The data shows it's the one asset that survived a global government crackdown in China,

5:08and it came back stronger. And the data doesn't support quantum will crack it. The data actually shows that the threat is decades away and Bitcoin developers are already building solutions. Now, Dallio holds 1% of his portfolio in Bitcoin. He allocates 5% to 15% to gold. In 10 years, he may look back and wish that those numbers were reversed. The irony is that Dallio's own framework, debt cycles, currency debatement, the decline of the rules-based order. It's the single best argument for Bitcoin, not against Bitcoin. He just hasn't followed his own logic to its conclusion yet. Ladies and gentlemen, I had a treat yesterday. I was in Washington, D.C., and I went to the A16Z's American Dynamism Summit. Alex Corp was there, and he dropped a straight heater talking about why the U.S. government could nationalize some of these AI companies. Take a listen. Without getting in specific people, or because I'm like, if Silicon Valley believes we are going to take away

6:11everyone's white-collar job, meaning primarily democratic, shaped people, who I grew up with, highly educated people who went to elite schools, or went to schools that are almost elite, who vote for one party, and you're going to screw the military. If you don't think that's going to lead to nationalization of our technology, you're retarded. And you might be particularly retarded because you have a 160 IQ, but this is where that path is going. Now, it's pretty funny when Carp said it, because the way he said it. But what he's saying has a hint of truth to it, actually a lot of truth to it. And this is exactly in line with what Jordi Visser told me is a big risk on Saturday. Take a listen to what Jordi said. The relationship between the government AI has been getting closer and closer during this, and now it's starting to come to a head. And the reason I bring it up is I have always believed that AI would get to the point that the government would have to have a huge influence on it, like a regulated utility.

7:13And it's not a coincidence that AI is considered electricity. So if that happens, what's the valuation of the hyperscalers? Well, compression. What do you think happens with the government? Again, I think the tools are getting so powerful, and at the end of the year, they're going to be more powerful that the government can allow. They're going to need to be involved to a much greater degree on the decision making where the focus is. So here's the deal. Do I know if the government is going to nationalize AI models or companies? Nope, I got no clue. Do I think that the US government will consider it if these companies keep running around, claiming that they've got nuclear weapons that could blast the US labor force, dominate the world, control the military, and generally put tech executives in control instead of the government? Yeah, I don't think that's going to end very well. So these guys should chill out. I think that is Karp's point. There has to be collaboration between the public and private sector. We can't be ruled by some sort of AI geniuses in Silicon Valley. I don't love the idea of the government nationalizing companies or technologies, but we are talking about weapons grade technology that can do things that we never

8:15thought was possible before. This is going to be a massive question in society over the coming years. What I think is probably more likely to happen is that the AI companies in the private sector they're going to push the pace of innovation. They're going to have all of these breakthroughs. And then the government's going to figure out one, how to use it internally, two, how to create rules around what can be done with this technology. And three, they're going to create a bunch of programs to try to help people navigate all the chaos and change that's going to come from this technology. That's what's happened for decades and decades in the United States. New technologies have shown up. The car, electricity, phones, the internet, and much more. AI is different, but it's still the same. And I think that's why people are so confused right now. But what I do know is that if tech executives on the West Coast think that they are going to march into Washington, DC and tell politicians and the government what to do, man, they have not watched enough television shows. Because my guess is that the Washington, DC bureaucrats or all of the tech executives that are now sitting in those seats,

9:18they're going to turn around. They're going to say, that's not how this works. And they're going to risk getting their companies nationalized. And that would be a development that a lot of people don't know how to navigate. Every once in a while, I come across someone who I think could be the next great investor. And to be honest, I think that we may have found the next Stanley Druckemiller, the next Steve Conewin or the next David Tepper. His name is Leopold Aschenbrenner. Leopold's a German AI researcher and investor, who's previously part of open AI's super alignment team. Then he got fired in April 2024. Supposedly there was this information leak. Aschenbrenner disputes that that ever happened. But whatever. So why is this guy potentially the next great investor? Well, back in 2024, you may remember that Leopold wrote 165 page essay. He named it situational awareness, the decade ahead. And it was incredible. It contains sections that predict the emergence of AGI. It imagines a path from AGI to superintelligence. It describes four risks to humanity. It outlines a way for humans to deal with super intelligent machines.

10:21And it articulates the principles of an AGI realism is what he called it. He specifically warns that the US needs to defend against the use of AI technologies by countries like Russia and China and other adversaries. And this guy literally argued that by 2027 AI systems will have the capacity to conduct their own AI research. He said that hundreds of millions of EGI's could then automate AI research compressing a decade of algorithmic progress into less than a year. And he says that that would lead to runaway superintelligence. Based on the progress we've seen already, we may be there a little bit earlier than he thought. But all that sounds cool, right? Well, Leopold turned that very popular essay into a $1.5 billion hedge fund at the time. The hedge fund was backed by the Carlson brothers, Daniel Gross, Nat Friedman and many others. And the returns have been off the charts. For example, the fund was up 47% net of fees in the first half of 2025. At the same time that they were up 47%, the S&P was only up 6%. And now you're going to hear that Leopold turned $200 million into $5.5 billion.

11:23But that's not really true. Most of that gain in AUM is coming not from appreciation, but rather new investors who are investing capital as LPs. But it doesn't take anything away from Leopold. He was bold with his claims about AI. He put a lot of money behind his ideas and it seems to be paying off. Remember the name Leopold Ashenbrenner? We may be watching the birth of the next great hedge fund manager. And my guess is, if he's really right about everything that he's writing, well, he's probably actually made a fraction of the amount of money that he's going to make over time. As for today's show, thank you guys so much for watching. Please remember to subscribe on YouTube. And I'll see you all live from the desk of Anthony Pompliano tomorrow.