Billionaire investor Ray Dalio has reiterated his advice to purchase Bitcoin and gold as hedges against a looming U.S. debt crisis. His comments follow the U.S. national debt crossing the $40 trillion mark, alongside a recent market rally that saw Bitcoin approach $80,000 for the first time since May.
Portfolio Diversification and Debt Warning
In a post on social media platform X, Dalio warned that rising U.S. debt is unsustainable and could reach levels the government can no longer manage without significant difficulty. He suggested that the government should address the situation while the economy remains relatively strong, noting that borrowing needs increase significantly during economic contractions.
Dalio advised investors to diversify across asset classes and countries with strong income statements and balance sheets, while avoiding heavy exposure to debt assets such as bonds. Instead, he recommended overweighting gold and maintaining a smaller allocation to Bitcoin, noting that holding 10% to 15% of a portfolio in gold can reduce overall risk.
Market Context and Federal Reserve Policy
Dalio's statements coincided with a period of market movement where Bitcoin rallied from a low of $63,000 to near $80,000. The rally occurred as the U.S. Treasury revealed plans to at least double its debt buyback following a rise in the 30-year yield to its highest level since 2007. The milestone of $40 trillion in national debt helped push Bitcoin past the $70,000 threshold.
Meanwhile, external factors such as the U.S.-Iran conflict continue to pressure the economy by driving up energy prices and inflation, which has exerted downward pressure on Bitcoin prices. Federal Reserve officials face pressure to curb inflation, with Polymarket prediction data showing a 55% probability that the Fed will implement an interest rate hike this year.
