The International Monetary Fund projects global debt to exceed $100 trillion this year. In response, billionaire hedge fund manager Ray Dalio emphasizes the importance of bitcoin and gold as safe haven assets.
During Abu Dhabi Finance Week, Dalio cautioned against debt-based investments, favoring “hard money” like gold or bitcoin. He explicitly stated his preference to “steer away from debt assets like bonds and debt, and have some hard money like gold and bitcoin.”
Dalio, the founder of Bridgewater Associates, highlighted that escalating global debt will continue to erode the long-term value of fiat currencies. He anticipates a looming debt crisis that will trigger a significant decline in value for these currencies. “I believe that there would likely be a pending debt money problem,” Dalio stated. “It is impossible for these countries to be able to not have a debt crisis in the years ahead that will lead to a great decline of value.” He recommends allocating a portion of a diversified investment portfolio to bitcoin. Furthermore, he asserted that fiat currencies face a precarious future due to rising debt levels, with leveraged assets like bonds posing higher risks compared to “blue-chip” assets such as gold or bitcoin.
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Dalio’s concerns about global debt align with those of international organizations like the IMF. In October, the IMF warned that “Sustained debt buildups can raise the probability of debt distress or broader financial crisis.” The UN Trade and Development reported that over 50 countries in the Global South are spending more than 10% of their revenue on debt servicing.
While Dalio entered the crypto space in 2021, his perspective on bitcoin has evolved. Last year, he expressed skepticism, stating to CNBC that bitcoin “has no relation to anything” and that other sectors were more compelling. He even suggested that alternative coins might emerge as more viable options. “I think you are probably going to see the development of coins that probably will end up being attractive as viable coins,” he remarked. “I don’t think bitcoin is it.”
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However, his recent statements indicate a shift in his viewpoint, recognizing bitcoin’s potential as a safe haven asset in a world grappling with increasing debt burdens. Dalio’s endorsement of bitcoin and gold underscores a growing concern among prominent investors about the stability of traditional financial instruments in the face of unprecedented global debt levels.
