TLDR
- Ray Dalio warns that the U.S. Dollar’s reserve currency status is declining due to mounting debt
- Bitcoin and cryptocurrencies are emerging as alternative stores of value alongside gold
- Gold has surged past $3,600/oz, up 33% this year, outperforming the S&P 500 by 3.5x
- Dalio recommends allocating about 15% of investment portfolios to Bitcoin or gold
- Stablecoins pose no systemic risk if well-regulated, but declining Treasury purchasing power remains a concern
The billionaire founder of Bridgewater Associates, Ray Dalio, has shared his views on why cryptocurrencies could become more attractive alternatives to the U.S. Dollar as debt-laden fiat currencies weaken. In a recent interview with the Financial Times and follow-up comments on social media, Dalio outlined how economic conditions are pushing investors toward digital assets and gold.
BILLIONAIRE RAY DALIO JUST SAID DUE TO ITS “LIMITED SUPPLY” #BITCOIN AND CRYPTO IS NOW ALTERNATIVE CURRENCY AGAINST THE USD
IT’S HAPPENING!!! pic.twitter.com/FPkDSKhVHC
— Vivek Sen (@Vivek4real_) September 3, 2025
Dalio pointed to the weakening status of the U.S. Dollar as a reserve currency, stating this trend is accelerating the adoption of Bitcoin and other cryptocurrencies as alternative stores of value. He explained that the limited supply of cryptocurrencies makes them appealing when compared to fiat currencies with expanding supplies.
“If dollar supply rises and demand falls, crypto becomes an attractive alternative,” Dalio stated. He clarified that most fiat currencies, especially those with large debt burdens, will struggle to maintain their value over time.
The hedge fund billionaire drew parallels to similar economic patterns that occurred between 1930 and 1940 and again from 1970 to 1980. These historical examples serve as warnings about the current economic trajectory.
https://t.co/TNyPpZYTmZ
— Ray Dalio (@RayDalio) September 2, 2025
Mounting Debt Concerns
Dalio dismissed the idea that deregulation threatens the dollar’s reserve status. Instead, he identified the massive debt loads of the U.S. and other reserve-currency issuers as the real danger.
He presented stark figures to make his case. The U.S. government spends approximately $7 trillion annually while collecting only $5 trillion in revenue, creating a $2 trillion deficit.
To cover its obligations, the U.S. must sell an estimated $12 trillion in new debt in the coming year. Interest payments alone have reached $1 trillion annually, representing half the budget deficit.
These economic pressures are what Dalio believes will lead to a “classic devaluation” of the U.S. currency. He warned that the country is approaching what he called a “point of no return” in its debt crisis.
Gold’s Rising Value
While Dalio sees potential in digital currencies, he maintains a preference for gold over Bitcoin. He cites gold’s role as the world’s second-largest reserve asset as a key factor in this preference.
Gold prices have been making major moves in the market, recently surpassing $3,600 per ounce for the first time in history. Since the beginning of the year, gold prices have increased by 33%, which is 3.5 times the returns generated by the S&P 500 during the same period.
Some market analysts remain bullish on gold for the long term. Popular analyst Benjamin Cowen stated: “Gold is now at $3500. I think it will go higher into EOY then get a 10-20% drop in 2026. Still long-term bullish on Gold.”
With Federal Reserve rate cuts expected during the September 17 FOMC meeting, the macro situation appears complex. The 30-Year Bond yield has now surged past 5.0%, further complicating the economic landscape.
According to The Kobeissi Letter, gold prices have been rising in correlation with Japanese government bond yields, showing international factors at play in the precious metal’s valuation.
In July, Dalio advised investors to allocate about 15% of their portfolios to Bitcoin or gold as a hedge against currency devaluation. This recommendation comes as part of his broader view that traditional fiat currencies face long-term challenges.
Dalio also addressed concerns about stablecoins, many of which are backed by U.S. Treasuries. He dismissed the notion that they pose systemic risks, provided they are well-regulated. However, he flagged the declining real purchasing power of Treasuries as a genuine concern for investors.
The growing chorus of concern among investors like Dalio highlights how ballooning debt may be the biggest threat to the dollar’s dominance in global markets. As these conditions persist, the appeal of alternative stores of value like Bitcoin and gold continues to grow.
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