Bitcoins transparency was once considered one of its greatest strengths. Now, says Ray Dalio, that may be the very reason central banks won’t adopt it as a reserve asset, even though companies and institutional investors have embraced it.
The billionaire hedge fund manager, who is also a bitcoin investor, said on X that “Bitcoin lacks privacy. Transactions can be monitored and potentially controlled, which is why central banks are not looking to hold it.”
Ray Dalio has previously said that he allocates about 1% of his portfolio to bitcoin.
Bitcoin, the world’s largest blockchain network, operates as a decentralized peer-to-peer system built on a public ledger. Every transaction is permanently recorded on this transparent ledger for everyone to see in real time.
Anyone can open a Bitcoin Block Explorer, enter a wallet address in the search field and see the entire transaction history associated with it. While wallet addresses are pseudonymous rather than directly linked to identities, blockchain analytics firms and law enforcement agencies can often track the movement of funds and link activity back to individuals or institutions.
In other words, the flow of BTC, the blockchain’s native token, is highly transparent and traceable, even if it is not always directly linked to real-world identities.
This level of transparency, often praised by Bitcoin supporters, may also be what keeps central banks away. Imagine being a central bank and accumulating an asset whose flows can be tracked in real time on a public ledger.
The lack of privacy is also a concern for large institutional players. At Consensus Hong Kong in February, participants noted that the mass adoption of blockchain technology at the institutional level may ultimately depend on stronger privacy features, especially for large transactions.
The market appears to be adapting to the growing expert consensus on privacy. For example, the privacy-focused coin zcash (ZEC) has risen over 800% since the beginning of 2025. Bitcoin, meanwhile, is down over 10%.
Correlated with stocks
However, Dalio’s concerns extend beyond the central banks being adopted. He pointed to structural issues that limit bitcoin’s appeal as a reserve asset compared to traditional alternatives such as gold.
One is its tendency to take cues from Wall Street, particularly technology stocks, rather than acting as an independent store of value during times of stress.
At the time of writing, the 90-day correlation coefficient between bitcoin and the Nasdaq, Wall Street’s tech-heavy index, was 0.89, according to data source TradingView. That translates into an R² of 0.79, meaning that about 79% of bitcoin’s price movements can be explained by its relationship to the Nasdaq over the 90-day period. The data points more to BTC’s behavior as a risk asset than an independent store of value.
The other issue that Dalio highlighted is the scale and structure of the market. Unlike gold, which is deeply established, widespread and exists outside of any single digital system, bitcoin remains a relatively small and more easily influenced market. In his view, these factors further weaken its case as a global reserve asset despite growing institutional participation.
“At the end of the day, gold is more widespread, deeply established and still plays a central role in the global system,” he said.
Dalio has repeatedly favored gold over bitcoin, and his views have been countered by crypto industry experts.
