Crypto To Overtake The Dollar? Ray Dalio Flags End Of Debt Cycle
Crypto sits on the coronary heart of Ray Dalio’s new message. On September 3, 2025, the Bridgewater Associates founder published a point-by-point rebuttal to what he referred to as the Financial Times’ “mischaracterizations,” releasing the complete written Q&A he says he offered to the paper. The trade restates his “Big Debt Cycle” framework and argues that rising US debt burdens, dangers to Federal Reserve independence, and mounting geopolitical fractures are eroding the greenback’s function as a retailer of wealth—circumstances that he says are boosting gold and crypto.
Why Crypto Is An “An Attractive Alternative”
Dalio frames the US fiscal place as late-cycle and dangerously self-reinforcing. “The nice excesses that at the moment are projected on account of the brand new funds will probably trigger a debt-induced heart-attack within the comparatively close to future—I’d say three years, give or take a 12 months or two,” he wrote. He quantified the near-term squeeze in stark phrases, citing “about $1 trillion a 12 months in curiosity” and “about $9 trillion wanted to roll over the debt,” alongside roughly “$7 trillion” in spending versus “$5 trillion” in revenues, requiring “an extra roughly $2 trillion in debt.” That increasing provide, he argued, collides with weakening demand when buyers query whether or not bonds “are good storeholds of wealth.”
The fulcrum, in Dalio’s telling, is now the Federal Reserve. If political pressure undermines the central bank’s independence, he warned, “we are going to see an unhealthy decline within the worth of cash.” Should a “politically weakened Fed” permit inflation to “run scorching,” the consequence can be that “bonds and the greenback [go] down in worth” and, if not remedied, changing into “an ineffective storehold of wealth and the breaking down of the financial order as we all know it.” He linked this to a broader late-cycle sample: international holders “decreasing their holdings of US bonds and rising their holdings of gold as a consequence of geopolitical worries,” which he referred to as “classically symptomatic” of the endgame.
Dalio related the macro and political strands to a extra interventionist coverage backdrop, referencing actions “to take management of what companies do” and likening the present section to the 1928–1938 interval. He didn’t pin the dynamic on a single administration—“this case has been occurring for a very long time beneath presidents from each events”—however stated post-2008 and particularly post-2020 insurance policies accelerated it. “The interplay of those 5 forces will result in large and unimaginable adjustments over the following 5 years,” he added, itemizing debt, home politics, geopolitics, acts of nature, and expertise (with AI most vital) because the drivers.
Within that late-cycle schema, Dalio positioned crypto squarely within the “exhausting forex” bucket. “Crypto is now an alternate forex that has its provide restricted,” he wrote. “If the availability of greenback cash rises and/or the demand for it falls, that will probably make crypto a sexy various forex.” He tied the latest “rises in gold and cryptocurrency costs” to “reserve forex governments’ unhealthy debt conditions,” and reiterated his long-running give attention to “storeholds of wealth.”
On whether or not crypto may “meaningfully substitute the greenback,” he emphasised mechanics over labels, noting that “most fiat currencies, particularly these with massive money owed, could have issues being efficient storeholds of wealth and can go down in worth relative to exhausting currencies,” a sample he stated echoed the 1930–1940 and 1970–1980 episodes.
Dalio addressed crypto stablecoin risk in that context, separating asset value drawdowns from systemic fragility: “I don’t suppose so,” he stated when requested if stablecoins’ Treasury publicity is a systemic danger, including that “a fall in the true buying energy of Treasuries” is the true hazard—mitigated “if they’re well-regulated.” He additionally rejected the notion that deregulation alone threatens the greenback’s reserve standing: “No,” he stated, pointing once more to debt dynamics as the first vulnerability.
Dalio’s newest remarks match inside a decade-long evolution of his public stance on Bitcoin and crypto somewhat than a whiplash reversal. Early on, he emphasised gold because the superior “storehold of wealth” and warned that if Bitcoin ever turned too profitable, governments would possibly prohibit it—tempering enthusiasm with regulatory danger.
By 2020–2021 he started calling Bitcoin “one hell of an invention,” acknowledged proudly owning a small quantity, and more and more framed it as a portfolio diversifier that rhymes with digital gold, whereas nonetheless stressing its volatility and coverage sensitivities. With his newest remarks, Dalio places your entire crypto market contained in the financial hierarchy he makes use of to research late-cycle dynamics.
At press time, the full crypto market cap stood at $3.79 trillion.
