Bridgewater Associates founder Ray Dalio said investors should own some Bitcoin as U.S. government debt pressures build, warning that the situation could weaken the dollar and erode the appeal of bonds.
Dalio tied his view to a series of recent shifts in the U.S. Treasury market that he said line up with the debt cycle described in his book How Countries Go Broke. He cited Japan beginning to reduce its Treasury holdings, long-term Treasury yields rising even as the dollar weakened, and Treasury Secretary Scott Bessent announcing a broader Treasury buyback program.
Bitcoin surged last week, and the market attributed part of that move to the Treasury’s buyback policy adjustment. The cryptocurrency climbed from about $63,500 on Wednesday to above $78,000 by Saturday. During that stretch, roughly $4 billion in short positions were liquidated.
Dalio said, however, that the U.S. government is typically pushed into buying back its own debt when market demand weakens, and that the Treasury’s ability to keep doing so is limited.
Deficit nears $2 trillion, interest expense could hit $1 trillion
Dalio estimated that the U.S. government will collect about $5.5 trillion in tax revenue this year while spending reaches $7.5 trillion, leaving a fiscal deficit of roughly $2 trillion. After excluding debt held within the government, publicly held federal debt is nearing $32 trillion, and annual interest payments could climb to $1 trillion.
He said soft demand for Treasurys would force the government to offer higher yields to attract buyers. That, in turn, would raise borrowing costs sharply and put pressure on both financial markets and the real economy.
Another option, in his view, would be for the central bank to expand the money supply and buy more government debt directly. That could support the bond market, but it could also weaken the currency and push inflation higher. Dalio’s point was that neither path ends well for the economy.
Dalio favors non-sovereign hard assets
Dalio said the U.S. is not alone. He expects the U.K., the European Union, China and Japan to face similar fiscal burdens. In an environment where fiat currencies are under depreciation pressure, he said assets that are not issued by governments, especially gold and Bitcoin, may offer stronger downside resilience and store-of-value characteristics.
On portfolio construction, Dalio said investors should reduce bond holdings, put 10% to 15% into gold and own some Bitcoin.
He did not provide a specific Bitcoin allocation this time. The report noted that in 2025, he had suggested allocating 15% of a portfolio to gold or Bitcoin, a noticeably more aggressive stance than his 2022 view, when he recommended only a 1% to 2% Bitcoin allocation.
Says a U.S. debt crisis could break within three years
Dalio said he has been warning for years about the risks tied to U.S. debt. He compared the current situation to a doctor repeatedly telling a patient to watch their diet, only for the warning to be ignored until a heart attack actually happens.
He said a U.S. debt crisis could fully break out in as little as three years.