Bitcoin Transparency was once considered one of its greatest strengths. Now, says Ray Dalio, that may be the real reason why central banks won’t adopt it as a reserve asset, even though corporations and institutional investors have adopted 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 do not seek to hold them.”
Ray Dalio has previously said that he allocates around 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 in this transparent ledger, allowing anyone to view it in real time.
Anyone can open a Bitcoin block explorer, enter a wallet address into the search bar, and see the entire transaction history associated with it. While wallet addresses are pseudonymous rather than directly linked to identities, blockchain analytics companies and law enforcement agencies can often track the movement of funds and link the activity 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.
Lack of privacy is also a concern for large institutional players. At Consensus Hong Kong in February, participants noted that mass adoption of blockchain technology at the institutional level may ultimately depend on stronger privacy features, particularly for large transactions.
The market appears to be aligning with the growing expert consensus on privacy. For example, the privacy-focused coin zcash (ZEC) is up more than 800% since the beginning of 2025. Meanwhile, Bitcoin is down more than 10%.
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However, Dalio’s concerns go beyond central bank adoption. He pointed to structural issues that limit bitcoin’s appeal as a reserve asset compared to traditional alternatives like gold.
One of them is its tendency to follow cues from Wall Street, especially technology stocks, rather than acting as an independent store of value during periods of stress.
At the time of writing, the 90-day correlation coefficient between bitcoin and Nasdaq, Wall Street’s technology index, was 0.89, according to data source TradingView. That translates to an R² of 0.79, meaning that roughly 79% of bitcoin’s price movements can be explained by its relationship with the Nasdaq over the 90 days. The data points to BTC behaving more as a risk asset than as 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, widely held and exists outside of any digital system, bitcoin remains a relatively small and more easily influenced market. In his opinion, these factors further weaken its position as a global reserve asset, despite growing institutional participation.
“Ultimately, gold is more widely held, more deeply established and still plays a central role in the global system,” he said.
Dalio has repeatedly favored gold over bitcoin, and his opinions have been countered by crypto industry experts.
