Ray Dalio warns that the US public debt is growing, reducing the attractiveness of the USD, pushing investors to seek gold and crypto as alternative storage channels.
Ray Dalio Warns US Debt Threatens USD, Boosts Crypto and Gold Demand
Billionaire Ray Dalio , founder of the world's largest hedge fund Bridgewater Associates, has just issued a series of warnings about the US public debt situation. He believes that the huge debt burden, combined with the government's increasing intervention in the economy and the risk of the Fed losing its independence, is pushing the USD to the brink of losing its position as the global reserve currency. In that context, gold and crypto, especially Bitcoin, are emerging as alternatives.
— Ray Dalio (@RayDalio) September 2, 2025
Economic "headache" from US public debt
- Dalio said years of excessive spending have put the United States in the final stages of a “big debt cycle.” He likened the current state to a body that has been overeating and smoking for years, and could have a heart attack at any time.
- He analyzed that the current interest expense of the US debt has exceeded 1,000 billion USD/year and is still increasing rapidly. The government is faced with Capital 9,000 billion USD of debt, plus 2,000 billion USD of deficit and 1,000 billion USD of interest, totaling about 12,000 billion USD need to mobilize next year.
Fed's independence under threat
- Dalio also expressed concern about President Donald Trump's threats to fire Fed Chairman Jerome Powell and his increasing intervention in monetary policy.
- According to him, if the Fed loses its independence and is forced to keep interest rates unusually low, bonds and the US dollar will lose value and gradually cease to be a safe place to store assets. This is a classic sign that the debt cycle has entered its final stage.
- At the same time, international investors have reduced their holdings of US bonds and increased their gold reserves due to geopolitical concerns, further reinforcing the view that the USD is weakening as a reserve currency.
- However, when bond buyers lose confidence and start selling, the risk of debt default becomes apparent and the government is faced with an extreme choice to save the situation:
- To increase interest rates → Increase the risk of national debt default.
- Print more money to buy debt → USD depreciates, confidence collapses.
Swelling Public Debt – Crypto Becomes Alternative Currency
- Dalio stressed that weak fiscal conditions in the US and many other reserve currency-issuing countries are eroding confidence in fiat currencies. He said:
“The sovereign debt situation of reserve currency-issuing governments is threatening the ability of the USD and other fiat currencies to maintain as stores of value. This is a major factor driving the growth of gold and crypto prices,”
- He compared the current situation to historical periods of turmoil such as the 1930s–40s and 1970s–80s, when fiat currencies lost value and investors were forced to seek other assets such as gold.
- According to Dalio, although he does not believe that crypto will completely replace the USD, the market has proven that Bitcoin and some Token with limited supply have become viable alternatives.
- Dalio recommends that a portfolio should be 15% invested in gold or Bitcoin , and he also confirmed that he holds some Bitcoin himself.
- Previously, the billionaire Chia that he prefers gold over Bitcoin, because Bitcoin's currency function has not been verified yet, as well as other concerns about security vulnerabilities and Internet privacy.
Perspectives on stablecoins and the GENIUS Act
- As for stablecoins , Dalio does not believe that these projects' holdings of large amounts of US government bonds pose systemic risk. On the contrary, he warns that the real risk lies in the gradual loss of purchasing power of bonds in an environment of high debt and inflation.
- Notably, the GENIUS Act, signed by President Trump earlier, establishes a legal framework for stablecoins, requiring stablecoins to be 100% backed by USD and T-bills, with periodic audits for issuers with a Capital of over 50 billion USD.
- This suggests that this is an indirect way for the US government to maintain demand for bonds. Stablecoins, thanks to the collateral mechanism, become a stable demand channel for T-bills: each USD stablecoin issued means an additional amount of USD or government bonds are purchased.
Conclude
- In response to Ray Dalio’s warnings, many investors have likened the US dollar to a “melting iceberg.” It is still large and still dominates the global financial sea, but the cracks from sovereign debt and interventionist policies are becoming more evident. As the icebergs begin to break away, Capital will seek new refuges.
- If the US dollar loses value too quickly, confidence in the international financial system could be shaken. In that scenario, gold and crypto could become more than just an investment, they could become “alternative platforms” for a new monetary order.
- For many countries and businesses, diversifying reserves is no longer an optional choice but an important strategy. The trend of adding crypto to the treasury is spreading from the Philippines with the Strategic Bitcoin Reserve proposal, to Strategy 's Bitcoin accumulation strategy, or BitMine with Ethereum. The market is witnessing a huge wave of Capital flowing from traditional financial institutions into crypto.
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