Bridgewater’s founder, Ray Dalio, announced at a financial conference that he will invest in “hard currencies” such as gold and Bitcoin to avoid potential debt crises and significant currency depreciation 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 Treasury Department, the total US debt has exceeded $36.1 trillion, reaching an unprecedented scale and continuing to grow rapidly. The impact of this on the US economy 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, the 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 because 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 like bonds and debt and hold some hard currencies like gold and Bitcoin.”
Hard currencies typically refer to currencies backed by physical commodities such as gold or silver, possessing characteristics such as scarce supply, stable value, and resistance to inflation. They are often regarded as long-term stores of value and provide hedging functions during economic instability. This is in contrast to 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 of 21 million coins and its production rate halves every four years, conforming to the scarcity characteristics of hard currencies. Although there is controversy regarding its value stability and inflation resistance, Dalio now considers Bitcoin as a type of hard currency, which undoubtedly represents significant praise and affirmation for Bitcoin.
Major currencies will experience significant depreciation
Dalio pointed out that the debt levels of Germany, the United States, China, and all major countries have reached unprecedented levels, making such debt levels difficult to sustain. He warned, “In the coming years, these countries will inevitably face debt crises, leading to significant currency depreciation.”
Dalio added that “debt, currency, and the economy” are among the five major forces he believes determine the global landscape. Other forces include internal political orders driven by wealth inequality and value differences, as well as external geopolitical patterns resulting from power conflicts such as the tensions between the United States and China.
Ray Dalio changes his previous position
However, Dalio was not always a loyal supporter of Bitcoin. He stated in December last year that Bitcoin cannot become an “effective currency” due to its excessive volatility and the unlikelihood of central banks adopting it. He stated at the time, “Bitcoin is neither an effective store of wealth nor a medium of exchange. Therefore, it is not an effective currency. Its volatility is not correlated to anything nearly as well as it is correlated to its own idiosyncratic qualities. It’s a shame.”
Dalio also added, “Governments can outlaw Bitcoin. They can’t outlaw gold. Still, for whatever that’s worth, most countries’ governments and central banks don’t want cryptocurrencies, versus which, the attention it is receiving is disproportionate relative to crypto’s place in the institutional world and its role as a medium of exchange.”
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 view. Although Ray Dalio previously praised Bitcoin as a “remarkable invention,” he expressed a desire to see a currency tied to inflation to ensure consumer purchasing power.
Bitcoin is now in a league of its own
However, the status of Bitcoin has changed significantly. With Bitcoin surpassing the milestone of $100,000 and rising to become the seventh-largest global asset by market capitalization, and with Trump’s campaign promise to establish a Bitcoin strategic reserve, the Russian parliament has recently proposed including Bitcoin in strategic reserve assets.
The success of MicroStrategy has led to other companies following suit in establishing Bitcoin reserves. Meanwhile, the launch of Bitcoin spot ETFs has also achieved tremendous success, with a total asset management scale of $107.7 billion. The adoption rate among institutions and traditional investors is rapidly increasing, and global consensus on Bitcoin continues to deepen.
This series of significant developments has led Ray Dalio to change his attitude towards Bitcoin, transforming from criticizing it as a highly volatile asset to recognizing it as a reputable hard currency.
