Since the US started its war against Iran, Bitcoin has surged by 30% (and there are currently two major shocks hitting the price of Bitcoin).
However, the price of Bitcoin is still far from reaching the all-time high of $126,000 in 2025, despite US Defense Secretary Peter Hegses' statement that China is secretly accumulating Bitcoin.
As traders prepare for an "upcoming" major move by the White House regarding Bitcoin, legendary billionaire Ray Dalio warns that the US dollar is teetering on the brink of collapse—while JPMorgan analysts predict a massive shift of funds from gold to Bitcoin.
The U.S. dollar is suffering a sustained depreciation, which some fear could escalate into a full-blown collapse—thus boosting the prices of gold and Bitcoin.
"The U.S. now spends $7 trillion a year and earns about $5 trillion, so it spends 40% more than it earns," Ray Dalio, founder of Bridgewater Associates, the world's largest hedge fund, told The New York Times' "Interesting Times" podcast.
"This deficit has persisted for some time, so its debt is about six times its revenue. Historically, this situation has caused problems."
May 11 Update: Following reports that U.S. national debt exceeds 100% of GDP, Mark Godwin, senior vice president of the Committee on Responsible Federal Budget, warned that the United States is entering a debt spiral.
"When this happens, at some point you're caught in this debt spiral," Godwin told The New York Times. "The only way to stop it is through some kind of systemic shock."
Meanwhile, the Congressional Budget Office (CBO) disclosed last week that the U.S. Treasury has paid $628 billion in net interest this year to pay off debt.
"Net interest payments on public debt increased by $41 billion (or 7%) as the debt size was larger than in the first seven months of fiscal year 2025 and longer-term interest rates were higher. Lower short-term rates partially mitigated the overall increase in interest payments," the CBO said.
Gold prices have rebounded in recent weeks after falling to $4,000 an ounce in April, with analysts citing inflationary pressures and a debt spiral as the driving forces.
"High inflation, growing sovereign debt, and ongoing global uncertainty continue to enhance the appeal of gold. The market doesn't need new catalysts—the existing ones have always been there," Max Baecker, president of American Hartford Gold (AHG), said in an email comment.
In recent years, U.S. debt has surged dramatically due to massive government spending during the COVID-19 pandemic and lockdowns, while rapid interest rate hikes to curb inflation have further increased the debt servicing costs of the $39 trillion debt pile-up.
"So when we look back at history, we see that in all these periods, all fiat currencies depreciated while gold rose," Dalio said, noting that gold is currently "the second-largest reserve currency for central banks."
When asked whether the economy was heading towards a "crisis and collapse," Dalio said that a future "financial crisis would mean very limited spending power," adding that he "does not believe any fiat currency will be an effective store of wealth."
Dalio's warning came at the same time as the views of analysts at Wall Street giant JPMorgan Chase, who believed that "the devaluation trade is rotating from gold to Bitcoin."
Gold prices have doubled in the past two years, rising alongside silver, as traders bet on continued inflation and the Federal Reserve's money printing that will devalue and dilute the dollar.
In a report seen by The Block, JPMorgan analysts led by managing director Nikolaos Panigirtzoglou said they see Bitcoin (dubbed "digital gold" due to its capped supply and immutability) surpassing gold as a devaluation trading instrument in the wake of the Iranian conflict, as Bitcoin ETF inflows have exceeded those of gold ETFs.
In March of this year, another billionaire investor, Stanley Druckenmiller, predicted that in 50 years the US dollar will no longer be the world's reserve currency—it may be replaced by Bitcoin or cryptocurrency.
"We're doing everything we can to destroy it," Druckenmiller said, likely referring to the soaring U.S. budget deficit, which he previously described as a "debt bomb." The dollar "may outlive me, but I doubt it will still be the reserve currency in 50 years."
Druckenmiller called the dollar "the cleanest dirty shirt" and said he doesn't know what might replace the dollar as the world's reserve currency, but it could be "something I hate about crypto," consistent with his initial prediction in 2021.
In addition, Tesla billionaire Elon Musk has (repeatedly) predicted the end of the dollar, sparking speculation that he is preparing for a major move in Bitcoin.
Musk warned that the world is heading towards a post-fiat currency era and declared that "energy is the real currency," sparking speculation among Bitcoin supporters that he is quietly backing cryptocurrencies.
Meanwhile, former Federal Reserve Chair Janet Yellen warned that US President Donald Trump may be pushing the dollar toward "hyperinflation"—a situation some believe could trigger a surge in Bitcoin prices.
