Ray Dalio warns soaring US debt is eroding the dollar’s strength. He says that this could push investors toward crypto and gold as alternative stores of wealth.
Ray Dalio, the billionaire founder of Bridgewater Associates, believes that the rising US debt loads could make crypto an attractive alternative to the dollar.
According to a recent post, he said that crypto functions as an “alternative currency” with a limited supply. This means that it offers investors a way to protect wealth if fiat currencies lose value.
Dalio argued that when governments overspend, currencies weaken as stores of value. He pointed to historical periods like the 1930s and 1970s, when debt and inflation triggered similar reactions.
US Debt Piles Threaten Reserve Currencies
Dalio dismissed claims that deregulation poses the biggest risk to the dollar’s global role. Instead, he said that the ballooning debt in the US and other reserve-currency nations is the more serious issue.
— Ray Dalio (@RayDalio) September 2, 2025
These fiscal challenges, according to Dalio, undermine their appeal as both reserve assets and reliable stores of wealth.
He noted that gold and cryptocurrencies are already benefiting from this trend, considering how prices are climbing as confidence in fiat weakens. Gold recently hit record highs above $3,500 per ounce, while Bitcoin and Ethereum have surged past $110,00,0 and $4,000, respectively.
No Major Risk from Stablecoins
The hedge fund manager also addressed worries about stablecoins, which are often backed by US Treasuries.
He said that stablecoins do not present much systemic risk if regulators enforce strong rules. The greater danger, he explained, lies in the declining value of Treasuries themselves.
“That shouldn’t produce any systemic risk in stablecoins if they are well-regulated,” he wrote. Still, he warned that as Treasuries lose purchasing power, stablecoins will remain indirectly tied to the health of US fiscal policy.
To this, he added that recent regulations may help limit that risk. For example, in July, President Trump signed the GENIUS Act, which is the first US federal law for stablecoins.
The Classic Devaluation Warning
Dalio has warned before that the US currently faces a “classic devaluation” of its currency. He said the government spends about $7 trillion each year while collecting only $5 trillion in revenue.
That $2 trillion shortfall adds pressure to borrow more, and interest costs now more than $1 trillion annually.
In order to meet obligations, Washington must issue roughly $12 trillion in new debt in the next year. Dalio said this dynamic leaves policymakers with two unattractive choices.
First, they can either choose to raise rates and risk a default crisis, or they can print money and further weaken the dollar. Either option, he argued, threatens the stability of the monetary system.
Gold Still Dalio’s Preferred Hedge
While Dalio recognises crypto as a useful alternative, he is more bullish on gold. He calls gold the world’s second-largest reserve asset and believes that it holds a stronger dominance in protecting wealth.
Still, he has advised investors to hold both assets.
Earlier this year, in July, he recommended allocating about 15% of a portfolio to gold or Bitcoin. He also confirmed that he personally owns some Bitcoin.
Crypto Gains Momentum Amid Dollar Weakness
In all, Dalio’s latest comments show the growing interest in crypto as debt concerns continue to heat up. Investors are more and more looking to diversify into scarce assets that cannot be printed or inflated away.
Bitcoin’s capped supply of 21 million coins makes it the most obvious example. However, Ethereum and other cryptocurrencies have also drawn attention as demand for alternatives grows.
