Much of Ray Dalio’s investment philosophy may already sound familiar to the hardest of hard-nosed bitcoiners. It’s a point worth raising, considering Dalio’s long-standing view that bitcoin is bubble-prone and a possible target for government sanctions.

The founder of what’s regularly called the world’s largest hedge fund by assets, Bridgewater Associates, which runs algorithmic strategies for mega-corporations, sovereign wealth funds and state pension plans, takes a macro view of global finance. And much of its success, Dalio says, lies in the founder’s heterodox view of money and credit. 

Consensus 2021: Ray Dalio will appear at this year’s CoinDesk’s Consensus 2021 conference on May 24 at 9:20 a.m. ET. Register here.

“Most of what people think is money is really credit, and it does disappear. As implied by this, a big part of the deleveraging process is people discovering that much of what they thought was their wealth isn’t really there,” Dalio wrote in a 2008 blog post, titled “How the Economic Machine Works and How It Is Reflected Now,” during the height of the financial crisis and updated in 2011. 

Bitcoiners, by contrast, in the extreme, believe fiat money – or money that has value because it’s backed by state authority – is illusory. Bitcoin is a monetary framework created as an alternative to a system where the Federal Reserve can print endlessly and private banks can increase the money supply by issuing loans. Bitcoin is a machine with brakes.

Dalio saw how the economic machine could malfunction. As early as 2006 he diagnosed a financial system buoyed by money printing and reliant on highly-leveraged positions for returns. Debt exceeded income. His firm calculated there was some $839 billion in bad debt in the U.S. that could implode, a figure he took to the U.S. Treasury Department in early 2007 as an unheeded siren’s song. 

What’s more, Dalio figured that heavily indebted countries only had one way out of the hole: printing more money to finance their public and private debts. Beyond devaluing the currency, money printing would drive down interest rates and force investors into safer, hedge assets. 

Bitcoin won’t escape our scrutiny.

“There hasn’t been a case in history where they haven’t eventually printed money and devalued their currency,” he told the New Yorker in 2011. (A sentence that could have been uttered by crypto doyen Meltem Demirors.)

Bridgewater’s flagship Pure Alpha fund (named for the rate money earns above normal market returns) positioned itself defensively ahead of the 2008 crisis. It went long on Treasury bonds, shorted the dollar and bought gold and other commodities.

When the housing market collapsed, Bridgewater did more than weather the ensuing crisis. Pure Alpha returned about 9.5% in 2008, 45% in 2010 and 23% in 2011 – years when the average hedge fund may have been in the red. Its assets under management (AUM) doubled to $100 billion in 2011 from $50 billion at the beginning of the meltdown. 

Dalio wasn’t alone in his views about monetary excess. Around the same time Bridgewater was shorting the dollar, Satoshi Nakamoto was coding Bitcoin. Its first block contained Bitcoin’s mission statement: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” Lo and behold, the world’s first digital, hard-capped financial network. 

Once called “Wall Street’s oddest duck,” Dalio’s heterodox views have maintained his fund’s prime position. The $150 billion fund routinely beats market expectations in an industry where higher funds are hardly guaranteed. (It should be said, Dalio isn’t always bearish on the U.S. dollar.) Meanwhile, bitcoin, a whole other financial beast, was the best-performing asset of the past decade, with annualized returns of 230%.

What then might explain the odd duck’s pessimism on bitcoin? 

Dalio, who declined to comment for this article, considers himself a “hyperrealist,” or someone determined to understand the underlying mechanisms driving the world. He reads history, is skeptical of emotionally tinged thinking and sees evolutionary patterns across society. Investing, like wild game hunting, is a risky, zero-sum business – but one for which you could prepare to gain an edge.

His “Principles,” a book of about 300 hard-learned lessons and aphorisms, sometimes called the “Tao of Dal,” advocates for “radical transparency.” Every Bridgewater recruit is to read and internalize the message: the world is comprehensible, and some people can be more right than others. Meetings are recorded and reviewed. Underlings, reportedly, are encouraged to speak up against their supervisors – just not behind their backs. (Dalio famously punched his first real boss in the face.)

It’s this commitment to the truth-finding process that may have opened Dalio’s eyes to bitcoin. He turned to Reddit and Twitter to get lessons in finance. In the past several months, Dalio has gone on record saying there are inflationary forces afoot and the traditional financial system is edging on bubble territory. And despite previously saying bitcoin failed as an inflation hedge, he now says that “bitcoin won’t escape our scrutiny” for a new alt-cash fund.