Hedge Fund Billionaire Ray Dalio Breaks Down What Could Make Crypto Outshine The Dollar

Billionaire hedge fund founder Ray Dalio has said that crypto could become an attractive alternative to the dollar as debt-laden fiat currencies weaken and become less attractive as stores of wealth.

In a post on X on Wednesday, Dalio described crypto as an “alternative currency” with limited supply. He argued that if the supply of dollars rises or demand for them falls, investors may increasingly view crypto as a better option.

Dalio, who built Bridgewater Associates into the world’s largest hedge fund, wrote to clarify comments he made in a recent Financial Times interview.

He said most fiat currencies, particularly those burdened with large debts, will struggle to maintain value. History, he noted, offers parallels, with similar dynamics playing out between 1930 and 1940 and again from 1970 to 1980.

Mounting Debt Loads Weigh On Appeal Of Reserve Currencies

He added that deregulation does not threaten the dollar’s reserve currency status. Instead, he pointed to the mounting debt loads of the US and other reserve-currency issuers as the real danger, arguing that these conditions undermine their appeal as both reserve assets and stores of wealth. This, he said, has contributed to rising prices for gold and cryptocurrencies.

Dalio also dismissed concerns that stablecoins, many of which are backed by US Treasuries, pose systemic risks. The bigger issue, he said, lies in the falling purchasing power of Treasuries themselves. “That shouldn’t produce any systemic risk in stablecoins if they are well-regulated,” he wrote.

Investor Warns US Faces ‘Classic Devaluation’ Of Its Currency

In July, Dalio advised investors to allocate about 15% of their portfolios to Bitcoin or gold. He warned that the US is heading toward a “classic devaluation” of its currency, similar to the episodes of the 1930s and 1970s, as the country approaches what he called a “point of no return” in its debt crisis.

He laid out stark figures to make his case. The US government spends about $7 trillion annually while raising only $5 trillion in revenue, leaving a $2 trillion deficit.

To cover its obligations, Washington 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.

Gold’s Role As Second-Largest Reserve Asset Drives Dalio’s Preference

Dalio has consistently shown a preference for gold over Bitcoin, citing gold’s role as the world’s second-largest reserve asset. While he sees potential in digital currencies, he continues to view the precious metal as a stronger hedge.

Earlier this year, Dalio cautioned that the US could face a crisis deeper than a recession if President Donald Trump mismanages tariffs and broader economic policy.

Dalio’s latest remarks reflect a growing chorus of concern among investors who see ballooning debt as the biggest threat to the dollar’s dominance.