Ray Dalio Warns of Dollar Decline, Suggests Bitcoin as a Hedge
The billionaire investor Ray Dalio has expressed concerns that the United States is approaching the late stages of a debt cycle, which threatens the role of the dollar as a global reserve currency. This development could lead to an increased demand for Bitcoin, gold, and other limited assets, as investors seek alternative stores of value. Dalio, the founder of Bridgewater Associates, shared his views in a written exchange with the Financial Times, which he later published in full to “counteract distortions” after accusing the newspaper of misrepresenting his comments.
Fiat Currencies Under Pressure
Dalio argued that the rising debt costs of the US government, which currently exceed $1 trillion per year, combined with fresh credit needs, are eroding trust in the currency and the dollar. This dynamic makes alternative assets, such as Bitcoin, more attractive to investors. According to Dalio, “crypto is now an alternative currency that has limited its supply.” He also believes that all fiat currencies are destined to lose value against “hard currencies” like Bitcoin, citing historical precedents between 1930 and 1940 and from 1970 to 1980.
Systemic Threats and Stability
Dalio was asked whether the current dynamics pose a systematic threat to stability, to which he replied, “I don’t think so.” Instead, he believes that the falling purchasing power of the dollar poses a greater systemic threat. The billionaire investor has previously suggested that investors allocate up to 15% of their portfolios to alternatives like gold and Bitcoin to protect themselves from a potential monetary devaluation.
Reserve Status Under Threat
Dalio warned that the Federal Reserve faces a dilemma between interest rates, risk, and market turmoil, which could lead to a decline in the value of the dollar. He noted that foreign owners have already started reducing their exposure to US bonds and shifting into gold, a classic sign of a late-cycle stress. The erosion of trust in the dollar could accelerate, pushing investors towards decentralized assets like Bitcoin. Dalio believes that the convergence of various forces, including debts, political disputes, and technological disruptions, could lead to “big and unimaginable changes” over the next five years.
Conclusion and Implications
By publishing his views, Dalio aimed to provide a clear and impartial analysis of how US political decisions are changing global finance. For Bitcoin, his warnings suggest that its role as a hedge against dollar devaluation could become increasingly important. As investors seek alternative stores of value, Bitcoin’s limited supply and decentralized nature make it an attractive option. For more information, visit https://cryptoslate.com/billionaire-ray-dalio-reiterates-warnings-of-dollar-decline-suggests-bitcoin-as-a-hedge/
