Ray Dalio says soaring US debt threatens dollar, fueling demand for crypto and gold as alternatives
Ray Dalio, billionaire founder of Bridgewater Associates, warned that swelling government debt poses a more serious threat to the dollar's reserve status than deregulation, which in turn is boosting crypto.
In written responses to the Financial Times on Wednesday — published after he accused the outlet of mischaracterizing his views — Dalio said fiscal excesses in the U.S. and other reserve-currency nations are eroding confidence in fiat money as a store of wealth. That, he argued, is driving investors toward gold and cryptocurrencies, echoing similar shifts seen in the 1930s–40s and 1970s–80s.
"The dollar and the other reserve currency governments' bad debt situations are threatening to their appeals as reserve currencies and storeholds of wealth, which is what has been contributing to the rises in gold and cryptocurrency prices," Dalio said, echoing comments from December when he recommended bitcoin as "hard money" amid national debt increases.
While not predicting that crypto would replace the dollar outright, Dalio suggested it has already established itself as a viable alternative.
"Crypto is now an alternative currency that has its supply limited," he said, providing investors with an attractive option if the U.S. money supply continues to expand or global demand for dollars declines. The implication, he added, is that investors seeking resilience will increasingly diversify into "hard currencies" such as gold and bitcoin as fiat systems lose value relative to scarcer assets.
Of course, not all cryptocurrencies have a limited supply, but Bitcoin's 21 million fixed total supply is the most obvious example. In July, Dalio recommended that a risk-adjusted portfolio should allocate 15% to gold or bitcoin, noting that he holds some bitcoin himself.
No systemic risk from stablecoin exposure to Treasurys
On stablecoins, Dalio downplayed fears that their heavy exposure to U.S. Treasurys could destabilize markets. Instead, he highlighted the broader risk of Treasurys losing real purchasing power in a high-debt, high-inflation environment. "That shouldn't produce any systemic risk in stablecoins if they are well-regulated," he said, though their reliance on Treasurys does tether stablecoins to the underlying health of U.S. fiscal policy.
On July 18, President Trump signed the GENIUS Act into law, establishing the first-ever federal regulatory framework for U.S. stablecoins, requiring them to be fully backed by liquid assets such as U.S. dollars and Treasury bills. It also mandates annual audits for issuers with a market capitalization of more than $50 billion, and establishes guidelines for foreign issuance.
Late-stage big debt cycle
The billionaire investor framed the moment as part of a late-stage big debt cycle, in which policymakers must choose between allowing rates to rise and risking a default crisis, or printing money to cover obligations and further undermining currency value. He warned that both outcomes threaten the monetary order unless policy shifts dramatically in the years ahead.
Beyond crypto, Dalio's broader remarks underscored his concerns about U.S. debt, the weakening of Federal Reserve independence, and rising state intervention in business. He compared current dynamics to the late 1920s and 1930s, citing growing populism, geopolitical rivalry, and technological upheaval as forces reshaping the global order. He cautioned that the interaction of debt, politics, climate, and AI will drive "huge and unimaginable changes over the next five years."
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