Bitcoin has soared back after losing ground earlier this week, climbing toward its all-time high price of over $60,000.
The bitcoin price hit an all-time high of around $62,000 per bitcoin earlier this month—more than double where it began the year—but has since fallen back, despite Elon Musk’s Tesla bombshell this week.
Now, the billionaire founder of the world’s largest hedge fund and legendary investor Ray Dalio has warned he thinks there’s a “good probability” bitcoin will be banned by the U.S. government—comparing it to the 1930’s U.S. gold ban.
“Every country treasures its monopoly on controlling the supply and demand,” Bridgewater Associates’s Dalio told Yahoo Finance this week. “They don’t want other monies to be operating or competing, because things can get out of control. So I think that it would be very likely that you will have it under a certain set of circumstances outlawed the way gold was outlawed.”
In the 1930s, President Franklin D. Roosevelt made gold ownership illegal in the U.S. in an attempt to shore up the Federal Reserve’s gold supplies so the Fed could justify printing more dollars.
Dalio pointed to reports of a proposed bitcoin ban in India as potentially laying the groundwork for a more widespread crackdown on bitcoin.
“[We] have to see what [reports of a proposed bitcoin ban in India] means,” Dalio said. “Now, can they do it? Yeah. Now we get into the particulars. My understanding from people who are sort of in government surveillance is yes, they can understand, they can track it. They can know who’s dealing with it … I would suspect it would be very hard to hold up against that kind of action.”
While previous attempts by governments to ban bitcoin—most notably by China during the huge 2017 cryptocurrency boom—have largely failed, there are growing fears the U.S. could be headed toward a bitcoin clampdown.
Last month, Treasury Secretary Janet Yellen warned bitcoin is an “extremely inefficient” way to move money and sees it mostly as a facilitator of “illicit finance.”
These comments were echoed by Fed chairman Jerome Powell, who this week said bitcoin is “not really useful as a store of value,” as it’s “not backed by anything.”
While Dalio has made similar bitcoin warnings in the past, writing in January that if bitcoin “is successful the government will try to kill it,” he did concede bitcoin has emerged as a legitimate speculative asset over the last few years.
Bitcoin has “proven itself” over the last decade as it “hasn’t been hacked,” “has built a significant following,” and has become “an alternative store hold of wealth”—it’s “worked on an operational basis,” said Dalio.
Bitcoin investors have meanwhile breathed a sigh of relief after the bitcoin price climbed off the psychological $50,000 per bitcoin level this week after plunging more than 10% in a matter of hours.
“A move below $50,000 would be bearish in the short term and would likely spook new entrants,” says Pete Humiston, managing director of Kraken Intelligence, part of the U.S.-based Kraken cryptocurrency exchange, speaking via Twitter DM. However, Humiston thinks bitcoin has plenty of breathing room between its current price and a new bear market.
“Historically significant levels of support also suggests bitcoin could trade as low as $40,000 without breaking the integrity of the bull market.”