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Ray Dalio says investors should own ‘a bit of Bitcoin’ as U.S. debt risks rise
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Ray Dalio, founder of Bridgewater Associates, has publicly recommended that investors hold "a bit of Bitcoin" as a hedge against rising U.S. government debt risks. The prominent fund manager suggests this allocation alongside a substantial 10% to 15% portfolio holding in gold.
Dalio's comments come as he observes patterns in the government bond market that align with his long-standing debt-crisis framework. He points to specific events, including Japan selling U.S. Treasury holdings and rising long-term bond yields alongside a weaker dollar, as warning signs. Treasury Secretary Scott Bessent's announcement of increased government bond buybacks is also noted as a symptom of thinning demand for U.S. debt.
The core issue Dalio identifies is a fiscal imbalance. The U.S. government expects to collect about $5.5 trillion in revenue while spending roughly $7.5 trillion this year, leaving a deficit around $2 trillion. Federal debt stands near $32 trillion, with interest costs alone projected to reach about $1 trillion.
If investors become less willing to buy government bonds, yields would be pushed higher to attract buyers. This makes borrowing more expensive, potentially weighing on markets and the economy. The alternative, in Dalio's view, is for the Federal Reserve to create money and purchase more debt, which would weaken the currency and fuel inflation.
Dalio sees similar pressures building in the U.K., EU, China, and Japan. Consequently, he believes assets not issued by governments, specifically gold and Bitcoin, will perform relatively well in a currency devaluation scenario. He advises underweighting traditional bonds within investment portfolios.
The Bridgewater founder estimates a potential U.S. debt crisis could emerge in about three years. He acknowledges that his previous warnings have appeared premature, comparing the situation to an unheeded doctor's advice until a crisis occurs. His current portfolio advice marks a shift from earlier, more conservative cryptocurrency recommendations, signaling a deepening concern about sovereign debt stability.
