Source: Bridgewater, the world's largest hedge fund, plans to invest in crypto funds for the first time

Bridgewater Associates, the world’s largest hedge fund, plans to invest in a crypto fund for the first time, two people familiar with the matter told CoinDesk. Bridgewater currently has no intention of investing directly in crypto assets themselves.

This is the clearest signal yet that the world's largest hedge fund, which currently manages $150 billion in assets, is taking crypto seriously as an asset class, following the announcement in May 2021 by its founder Ray Dalio of a personal investment in Bitcoin.

Still, the investment is small compared with total assets under management, and other prominent cryptocurrency investors are in talks to invest in the fund, one of the sources said.

Last month, a spokesperson for the firm said it had no current plans to invest in cryptocurrencies — despite four people saying the hedge fund giant would enter the space by mid-2022.

“Bridgewater made plans in the first half of this year. They are planning to allocate a small portion of the fund directly into digital assets,” one source said in February. Another person familiar with the hedge fund’s crypto trading plans said: “Bridgewater is looking to get involved. They are doing serious research: liquidity, service providers, etc.”

Bridgewater released a report on institutional adoption of cryptocurrencies in January. Dalio said, "I believe Bitcoin is a remarkable invention. It is an amazing achievement to have invented a new currency through a system programmed in a computer and to have continued to operate for about 10 years while rapidly gaining popularity as a means of currency and wealth storage."

Bridgewater is plotting a similar path to Marshall Wace, a large London-based hedge fund, which is setting up a crypto fund that will target investments in areas such as stablecoins, digital currency payment systems and blockchain technology.

Ray Dalio has said it’s reasonable for individual investors to allocate 1% to 2% of their portfolios to Bitcoin. He acknowledged that Bitcoin has “pros and cons” but is more concerned about government bans on cryptocurrency and its use in ransomware attacks. Dalio said this is part of the reason why his stance on cryptocurrency is not “black and white.”

Dalio also touched on the fact that Bitcoin is viewed by its supporters as a form of digital gold and a hedge against inflation. He said it can be compared to gold because, by design, Bitcoin’s supply is limited: “I think inflation-hedge assets are likely to do better over time, which is why I don’t like things like cash.”