Dalio Warns of Gold-Backed Currency Return, Advises Bitcoin
Bridgewater Associates founder Ray Dalio has warned that the US might revert to a gold-backed currency system if excessive money printing continues. On social media, Ray Dalio highlighted historical cycles where devalued currencies prompted governments to restore a gold standard, illustrating the potential return of a gold-backed currency regime. Dalio noted that past high debt levels and credit growth often lead policymakers to lower interest rates and devalue the US dollar, benefiting debtors while harming creditors. He pointed to tensions between former President Trump’s desire for currency devaluation to manage debt and Fed Chair Jerome Powell’s focus on low inflation. To hedge against potential currency depreciation, Dalio recommends investors allocate about 15% of their portfolio to safe-haven assets like gold or Bitcoin. This diversification strategy aims to protect wealth amid ongoing debates over US monetary policy and inflation.
Bullish
Dalio’s warning of a potential return to a gold-backed currency system underscores renewed interest in alternative stores of value. Historically, discussions around gold standards and currency devaluation have driven safe-haven demand for both gold and Bitcoin. Traders often view such macro uncertainty as a bullish signal for digital assets, expecting capital flows into Bitcoin when inflation fears rise. Similar patterns emerged during the 2020–2021 Fed easing cycle, when increased monetary stimulus and concerns over fiat debasement fueled Bitcoin’s rally. In the short term, market volatility may increase as investors reposition portfolios toward hedges like Bitcoin. Over the long term, persistent debate on monetary policy and rising debt levels could support sustained demand for digital stores of value. Thus, this news is likely to have a bullish effect on crypto markets.