Rebecca Patterson, director of investment research at Bridgewater Associates — the world's largest hedge fund manager, has explained what could make the firm invest in bitcoin.
In an interview with Bloomberg TV on Wednesday, Patterson said, firstly, bitcoin's volatility needs to be reduced. "Right now, bitcoin can move 10% on a tweet. That's not exactly a stronghold of wealth for most institutional investors," she said, adding that bitcoin's volatility is about ten times that of the U.S. dollar and still double that of the Venezuelan Bolivar.
"You want to see lower volatility, more stable asset if you want to consider it as a stronghold of wealth, a diversifier," said Patterson.
Secondly, bitcoin needs to have greater liquidity, and finally, it needs to have regulatory certainty, said Patterson.
"The more you get a real regulatory ecosystem developing around bitcoin, other cryptocurrencies, the more other types of investors are going to be comfortable coming in. That's going to bring the liquidity. That's going to reduce the volatility," said Patterson. "If there were one thing I were watching first, it would be seeing more regulatory certainty, and I'm not sure when that's going to come in the U.S."
Patterson further said that she doesn't view bitcoin as a currency, but the cryptocurrency may become digital gold over time.
Bridgewater, founded by Ray Dalio in 1975, manages more than $150 billion worth of assets. Last month, Dalio said, bitcoin is "one hell of an invention," and it "won't escape our scrutiny."