Ray Dalio Recommends Buying Bitcoin, Gold as Hedge Against Looming U.S. Debt Crisis

Billionaire investor Ray Dalio has again made a case for buying Bitcoin and gold as hedges against the looming U.S. debt crisis. His comments come as the U.S. debt crossed the $40 trillion mark earlier this week, with BTC rallying to nearly $80,000 for the first time since May.

Ray Dalio Says Buy Bitcoin and Gold as U.S. Debt Rises

In an X post, Dalio reiterated his advice to buy BTC and gold to navigate the risk of rising U.S. debt. This came as he warned that rising debt is unsustainable and could soon reach levels the government can no longer manage.

“As general advice, I suggest diversifying well in asset classes and countries that have strong income statements and balance sheets and are not having great internal political and external geopolitical conflicts, underweighting debt assets like bonds, and overweighting gold and a bit of Bitcoin,” he said.

The billionaire investor further noted that holding 10% to 15% of one’s money in gold can reduce a portfolio’s risk. Dalio’s statement comes amid BTC’s recent rally towards $80,000 from as low as $63,000 earlier this week.

As CoinGape reported, Bitcoin rallied as the U.S. Treasury revealed plans to at least double its debt buyback after the 30-year yield rose to its highest level since 2007. On the same day, U.S. debt crossed $40 trillion, further fueling the rally as BTC jumped above the psychological $70,000 level.

U.S. Debt At An Inflection Point

Ray Dalio said the government’s financial situation is at an inflection point because it could soon rise to levels where the government will be unable to manage it “without great trauma.” He also advised that the government should manage the situation now, while the economy is relatively strong, rather than when it is weak.

“That is because when the economy is in a contraction, the government’s borrowing needs increase a lot,” he explained. The investor also said that policies and exogenous factors, like major political shifts and wars, can hasten or delay a debt crisis.

The U.S.-Iran war continues to pressure the U.S. economy, with inflation rising as energy prices rise, which has, so far, put downward pressure on Bitcoin’s price. Fed Chair Kevin Warsh has pledged price stability even as the FOMC faces pressure to hike rates to curb rising inflation.

Notably, the odds of a Fed rate hike have climbed above 50% again amid the Treasury’s move to calm the bond market. Data from the top crypto prediction market platform Polymarket shows a 55% chance that the Fed will hike rates this year.