Billionaire investor Ray Dalio said the U.S. is nearing the late stages of a debt cycle that threatens the dollar’s role as the world’s reserve currency, a shift that he believes could boost demand for Bitcoin, gold, and other limited-supply assets.
Dalio, founder of Bridgewater Associates, released the comments after accusing the Financial Times of misrepresenting his views shared in an interview.
He said he agreed to respond to the paper’s questions in writing, but when the exchange was not published, he made the full Q&A public to “counter distortions.”
Fiat currencies destined to fall
Dalio argued that the U.S. government’s soaring debt service costs, now about $1 trillion annually, combined with fresh borrowing needs, are eroding confidence in Treasuries and the dollar.
He added that this dynamic makes alternative assets more appealing.
According to Dalio:
“Crypto is now an alternative currency that has its supply limited, so, all things being equal, if the supply of dollar money rises and/or the demand for it falls, that would likely make crypto an attractive alternative currency.”
He also shared his belief that all fiat currencies are destined to fall in value against “hard currencies” like Bitcoin.
Dalio said:
“This is what happened in the 1930 to 1940 period and the 1970 to 1980 period.”
He made the statement in response to a question about whether crypto could viably replace the dollar. He also responded to questions regarding stablecoins and their exposure to treasuries.
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The FT questioned whether the dynamic could pose a systematic threat to stability. Dalio responded, “I don’t think so.” He added that declining treasury buying power is a bigger systemic threat in his view.
Dalio has previously suggested that investors allocate up to 15% of their portfolios to alternatives like gold and Bitcoin to protect against monetary debasement.
Reserve status in jeopardy
Dalio said the Federal Reserve faces a dilemma between letting interest rates rise, risking default and market turmoil, or printing money to cover obligations, which would weaken the dollar’s value.
He warned that foreign holders have already begun reducing their exposure to U.S. bonds and turning to gold, a classic sign of late-cycle stress.
Political threats to Fed independence, he added, could accelerate the erosion of confidence and further push investors toward scarce, decentralized assets.
Dalio placed these pressures in the context of what he calls the “big cycle,” a recurring set of forces including debt, political strife, geopolitical conflict, climate risks and technological disruption.
He said their convergence could produce “huge and unimaginable changes over the next five years.”
By publishing the Q&A, Dalio said he sought to provide a clear, non-partisan analysis of how U.S. policy decisions are reshaping global finance. For Bitcoin, his warnings suggest its role as a hedge may strengthen as trust in the dollar erodes.