Dalio Warns Dollar Faces Long-Term Decline, Will Underperform Gold and Yuan – Is this Good For Crypto?
Bridgewater Associates founder Ray Dalio warned that the US greenback faces sustained long-term weak point towards gold and main currencies, with 2025 marking what Dalio believes to be a decisive shift in international capital flows.
The greenback fell 39% towards gold whereas declining 12% towards the euro and 13% towards the Swiss franc.
“The greatest story and the largest market strikes of the 12 months have been the results of the weakest fiat currencies falling probably the most, whereas the strongest/hardest currencies strengthened probably the most,” Dalio wrote in his year-end reflection.
His evaluation reveals gold returned 65% in greenback phrases, outperforming the S&P 500 by 47%.
“The S&P fell by 28% in gold-money phrases,” he famous. European shares outperformed US equities by 23% and Chinese shares by 21%, reflecting what Dalio describes as “large shifts in flows, values, and, in flip, wealth away from the US.“
Dollar Weakness Reflects Structural Fiscal Pressures
The forex’s decline stems from structural fiscal imbalances and shifting expectations for financial coverage.
“A considerable amount of debt (practically $10tn) will have to be rolled going ahead,” Dalio wrote, warning that simultaneous Fed easing to push actual rates of interest down makes “debt belongings look unappealing, particularly on the lengthy finish of the curve.“
He expects “an additional steepening of the yield curve appears possible.“
Trump administration policies compound these pressures by means of what Dalio calls “an all-out aggressive wager on capitalism” involving stimulative fiscal coverage and diminished rules to spice up manufacturing.
While aimed toward revitalizing manufacturing, these measures widen wealth gaps as capitalists seize most positive factors.
“The worth of cash situation, in any other case often called the affordability situation, will in all probability be the primary political situation subsequent 12 months,” he predicted, anticipating it to contribute to Republican losses within the House.
Geopolitical shifts accelerated greenback weak point. “In 2025 there was a transparent shift from multilateralism to unilateralism,” Dalio noticed, noting this raised battle threats and “contributed to the elevated use of financial threats and sanctions, protectionism, deglobalization” whereas strengthening demand for gold.
Yield Curve Steepening Signals Shifting Financial Conditions
The US bond market entered 2026 with its steepest yield curve since 2021, with the unfold between two-year and 30-year Treasuries reaching 140 foundation factors, Bitfinex analysts noted in their latest report.
They added that this displays markets anticipating coverage fee cuts whereas demanding increased compensation for holding long-term authorities debt amid inflation uncertainty and heavy Treasury issuance.
The curve steepens when long-term charges rise sooner than short-term charges, creating what the report describes as “increased time period premia, persistent inflation uncertainty, heavy Treasury issuance, and rising fiscal issues.”
While decrease coverage charges recommend lodging, elevated long-term yields proceed elevating borrowing prices throughout the financial system, partially offsetting aid from front-end easing.
For equities, increased long-term low cost charges restrict valuation enlargement, notably for progress shares whose earnings lie far sooner or later.
The report notes that corporations with near-term money flows, pricing energy, and tangible belongings are inclined to fare higher in this atmosphere.
In instances like this, Coinbase CEO Brian Armstrong has framed Bitcoin as making use of constructive stress on US policymakers to keep up fiscal duty.
“Bitcoin gives a test and steadiness on the greenback,” he said on a current Tetragrammaton podcast.
Armstrong additionally warns that inflation with out matching progress might price the greenback its reserve standing.
Precious Metals Rally Delays Crypto Upside
Bitcoin and Ethereum’s consolidation connect with capital flowing into treasured metals amid geopolitical stress.
Speaking with Cryptonews, Farzam Ehsani, co-founder and CEO of VALR, notes gold rose 69% and silver surged 161% over the previous 12 months.
Long-term Bitcoin holders stopped promoting for the primary time since July, whereas Ethereum confirmed enhancing fundamentals, together with a cleared staking exit queue and document transaction exercise at traditionally low charges.
“Bitcoin’s present sideways motion towards the backdrop of record-breaking positive factors in gold and silver resembles a ‘calm earlier than the storm,’ usually adopted by a broader crypto market rally,” Ehsani mentioned.
He tasks that Bitcoin might attain $130,000 and Ethereum $4,500 in Q1 2026, as soon as treasured metals momentum fades, with considerably increased upside if gold and silver expertise sharper corrections.
At publication time, Bitcoin is buying and selling barely above $91,000, down practically 1.5% within the final 24 hours.
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