The multimillionaire compared the current situation to the US Great Depression. He sees the coronavirus pandemic and social distancing like tsunami strikes.
Philanthropist and multimillionaire investor Ray Dalio sees a bleak picture for the US economy and the whole world, due to the coronavirus pandemic. The founder of the Bridgewater Associates investment fund predicted a collapse, rather than a mere recession, which will require a long recovery time from countries.
The executive considers that the current scenario is much more complex than that of the economic and financial crisis of 2008. At that time, the Gross Domestic Product (GDP) of the USA fell by 4.3% due to the collapse of the real estate market. That situation subsequently led to the birth of Bitcoin as the first cryptocurrency.
Dalio compared the current situation, in which economies are almost paralyzed and the rate of unemployment is increasing, to what happened in the USA between 1929 and 1933 during the so-called Great Depression. The latter was of the largest economic crises recorded in history, with a drop in GDP by 30% and in unemployment by nearly 25% in a period of three years.
He believes that this is not a recession but a collapse. He said that humanity is experiencing something similar to what happened in the 1930s. He considers that it could be “like a tsunami” that is going to make people change completely.
In his reflections, Dalio did not mention Bitcoin as a possible alternative for protection amid the current situation. However, he commented that a successful investor must know how to diversify the funds available.
Regarding governments’ measures to minimize the impact of the coronavirus on the economy, Dalio clearly stated that the same as in the past, decisions like printing money, 0% interest rates and bailout plans still apply.
In the past, Dalio has also referred to Bitcoin, which he questions for its volatility. In January of this year, the executive stated that money has two purposes: medium of exchange and store of value. He said that Bitcoin is not effective in any of these cases now.
Cryptocurrency market analyst, Willy Woo, considers that it is interesting to see that Ray Dalio thinks that this is a cycle change in the long-term debt, which he defines as a restart occurring every 70 years. He said that it implies a change in money structure, the last one after the Second World War when the US dollar became the reserve currency.
According to a recent analysis by Woo, in contrary to Dalio’s position, Bitcoin could have safe-haven properties. Woo reached that conclusion by comparing the sharp decline in international markets and that of cryptocurrencies, which occurred on March 12th, which the main cryptocurrency managed to resist better than other markets.
Another positive sign that cryptocurrencies have given in the first quarter of 2020 is the growth in trading volume by 61%. Furthermore, in a report on Bitcoin’s behavior, market analysts determined that the pioneering cryptocurrency may be a safe-haven asset.
By Willmen Blanco