Ray Dalio, founder of Bridgewater Associates, stated at a financial conference that he will invest in “hard currency” such as gold and bitcoin to avoid potential debt crises and significant currency devaluation in the future. He warned that major economies including the United States and China have reached unsustainable levels of debt.
According to the latest data from the US Department of Treasury, the total US debt has exceeded $36.1 trillion, reaching an unprecedented scale and continuing to grow rapidly. How this will affect the US economy in the future has been a concern for global economists.
Ray Dalio: I will invest in hard currencies such as bitcoin and gold
In response to this, Ray Dalio, founder of the world’s largest hedge fund Bridgewater, stated at a financial conference in Abu Dhabi on Tuesday that he will invest in “hard currencies” such as gold and bitcoin while avoiding debt assets, as most major economies are facing increasingly severe debt problems.
“I think there may be a problem with debt currencies, so I want to stay away from debt assets such as bonds and debt and hold some hard currencies, such as gold and bitcoin.”
Hard currency typically refers to currencies backed by physical commodities such as gold or silver, which have characteristics of limited supply, stable value, and resistance to inflation. They are often seen as long-term stores of value and provide hedge functions during economic instability. This contrasts with fiat currencies such as the US dollar and the euro, whose supply is adjusted by central bank policies and are susceptible to inflation.
Bitcoin has a maximum supply limit of 21 million coins and its production rate halves every four years, adhering to the scarcity characteristics of hard currency. Although there is controversy regarding its stability and resistance to inflation, Dalio’s current view of bitcoin as a form of hard currency undoubtedly represents significant praise and affirmation for bitcoin.
Major national currencies will experience significant devaluation
Dalio pointed out that the debt levels of Germany, the United States, China, and all major countries have reached unprecedented heights, and such debt levels are difficult to sustain. He warned, “In the coming years, these countries will inevitably face debt crises, leading to a significant devaluation of their currencies.”
Dalio added that “debt, currency, and economy” are among the five major forces he believes determine the global landscape. Other forces include internal political order (driven by wealth distribution inequality and value differences) and external geopolitical patterns (such as power conflicts brought about by tense US-China relations).
Ray Dalio’s change in stance
However, Dalio is not actually a loyal supporter of bitcoin. He stated in December last year that bitcoin cannot become an “effective currency” because of its excessive volatility and the unlikelihood of central banks adopting it. He stated at that time, “Bitcoin is neither an effective store of wealth nor a medium of exchange. Therefore, it is not an effective currency. Its volatility has no correlation with almost anything. It is a very, very bad substitute for gold.”
Dalio also added, “Governments can ban bitcoin, they can control it. In any case, central banks and nations do not want it. The attention it receives is far disproportionate to its scale.”
Ray Dalio pointed out that gold is the third-largest foreign exchange reserve held by central banks, second only to the US dollar and the euro, which further supports his viewpoint. Although Ray Dalio previously praised bitcoin as a “remarkable invention,” he mentioned at that time that he hoped to see a currency “linked to inflation” created to ensure consumers’ purchasing power.
Bitcoin is now in a league of its own
However, the status of bitcoin has changed significantly. With the price of bitcoin surpassing the $100,000 milestone, ranking as the seventh-largest global asset by market capitalization, and with Trump promising to establish a strategic bitcoin reserve during his campaign, the Russian parliament has recently proposed including bitcoin in strategic reserve assets.
The success of MicroStrategy has led to many companies following suit and establishing bitcoin reserves. At the same time, the launch of bitcoin spot ETFs has achieved tremendous success, with a total assets under management of $107.7 billion. The adoption rate among institutions and traditional investors is rapidly increasing, and the global consensus on bitcoin continues to deepen.
This series of major developments has led Ray Dalio to change his attitude towards bitcoin, shifting from criticizing it as a highly volatile asset to recognizing it as a more accepted form of hard currency.