coindesk.com
Prominent fund manager Ray Dalio says investors should hold "a bit of Bitcoin" as the U.S. government heads deeper into a debt problem that could eventually weaken the dollar and make bonds less attractive.
The Bridgewater Associates founder said Friday that several recent moves in government bond markets fit the pattern he described in his book How Countries Go Broke. Those include Japan selling some of its U.S. Treasury holdings, long-term U.S. bond yields rising alongside a weaker dollar, and Treasury Secretary Scott Bessent announcing that the government would increase buybacks of own bonds.
Crypto investors widely attributed last week's rally to the buyback tweaks, with bitcoin climbing from about $63,500 on Wednesday to above $78,000 by Saturday and roughly $4 billion of bearish positions force-closed along the way. Dalio says governments buy back their own debt when demand for it is thinning, and that Bessent has only limited capacity to keep doing it.
The U.S. government expects to collect about $5.5 trillion in revenue this year while spending roughly $7.5 trillion, he wrote. leaving a deficit of around $2 trillion. Federal debt excluding money the government owes itself stands near $32 trillion, while interest costs alone are expected to reach about $1 trillion.
If investors turn less willing to buy government bonds, the weak demand pushes yields higher as the government offers better returns to attract buyers. Higher rates make borrowing more expensive and can weigh on markets and the economy.
The alternative, in Dalio's view, is for the central bank to create money and buy more debt, which can weaken the currency and raise inflation. He describes neither as good.
Dalio expects similar pressures in the U.K., European Union, China and Japan, which is why he expects assets that are not issued by governments, specifically gold and bitcoin, to perform relatively well if currencies are devalued.
He recommends underweighting bonds, holding roughly 10% to 15% of a portfolio in gold and owning "a bit of Bitcoin." He did not give a target allocation for BTC, though he told investors in 2025 to allocate 15% of their portfolios to “gold or Bitcoin,” up from a 2022 recommendation of just 1–2% in bitcoin