Billionaire Ray Dalio Recommends 15% Allocation in Bitcoin as U.S. Faces Debt Crisis

Synopsis– Legendary hedge fund manager issues warning on America’s fiscal path, calls for investor action amid mounting national debt and currency devaluation.

The Debt Doom Loop Threatens the U.S. Economy

Ray Dalio, billionaire founder of Bridgewater Associates, has sounded the alarm over America’s growing debt crisis. On a recent episode of the Master Investor podcast, he advised investors to allocate 15% of their portfolios to Bitcoin or gold. He framed this move as a necessary hedge amid what he calls a “debt doom loop” spiralling through the U.S. and other Western economies. The U.S. national debt now stands at $36.7 trillion, according to Treasury data. This equals around 125% of GDP, one of the highest ratios among industrialised nations. Dalio explained that the government spends $7 trillion annually while generating only $5 trillion in revenue. This $2 trillion shortfall forces the Treasury to borrow more and more each year.

Most concerning is the cost of debt itself. Interest payments have reached $1 trillion annually, nearly half the size of the deficit. To manage upcoming obligations, Dalio estimates the U.S. will need to issue $12 trillion in new Treasury securities within a year. That includes $1 trillion in interest, $2 trillion in new borrowing, and $9 trillion to roll over existing debt. A new Treasury report backs this projection. It estimates $1 trillion in borrowing for Q3 2025 alone, $453 billion higher than previously expected. Another $590 billion is expected in Q4. This growing dependency on borrowing raises alarm about the country’s long-term fiscal sustainability.

Dalio Pushes for 15% in Bitcoin or Gold

In light of this economic reality, Dalio suggests that investors pivot 15% of their holdings into Bitcoin or gold. He believes this shift offers the “best return-to-risk ratio” in today’s volatile market. Dalio emphasised that gold remains his personal preference, though he holds a small amount of Bitcoin. He leaves the exact split between the two to individual investors, depending on risk appetite and portfolio strategy. This new recommendation marks a major shift from his previous guidance in January 2022, when he supported only a 1% to 2% allocation to Bitcoin.

Both Bitcoin and gold have performed well in the current economic environment. Bitcoin trades near $118,100, just 4% below its July 14 all-time high of $123,230. Gold, too, has touched multiple record highs in recent months, indicating growing investor concern over inflation and devaluation. Dalio refers to both assets as “store-of-value” investments. He notes that they tend to outperform fiat currencies during periods of economic stress, offering portfolio resilience when traditional assets struggle.

Global Warnings

Dalio warns that the U.S. is not alone in this crisis. Countries like the United Kingdom are also deep in debt, with Britain owing £2.87 trillion and paying £110 billion in annual interest. These nations, he says, are all caught in a similar “debt doom loop,” with their fiat currencies weakening relative to hard assets like gold and Bitcoin. Despite advocating for Bitcoin as a portfolio hedge, Dalio remains skeptical of its role as a reserve currency. He argues that central banks are unlikely to adopt it due to its lack of privacy. Bitcoin’s open ledger makes every transaction visible, an issue for governments seeking discretion.

Moreover, he points to possible vulnerabilities in Bitcoin’s code that may hinder its long-term stability. While he acknowledges its strengths, he views Bitcoin primarily as a diversifier, not a full replacement for sovereign currencies or central bank reserves.

Long-Term Outlook

Dalio believes the U.S. must reduce its fiscal deficit to 3% of GDP to avoid a financial crisis. Achieving this would require tax increases, spending cuts, or interest rate reductions. However, given the current political climate, he doubts that policymakers will act swiftly or decisively. Without reforms, he warns of a possible “economic heart attack” within a few years. In such a case, hard assets like Bitcoin and gold may become critical to preserving purchasing power.

Dalio’s remarks have sparked debate within investment circles. Although some applaud his forward-thinking approach, others highlight the risks. Bitcoin remains volatile and faces regulatory uncertainty. Gold, while stable, lacks the growth potential of equities or real estate. Still, the core message is clear: diversification matters. With national debts ballooning and currency risks mounting, a balanced portfolio with exposure to hard assets may help investors weather the storm.

As Dalio puts it, the challenge isn’t only financial; it’s systemic. Investors must prepare now for what lies ahead, and according to one of the world’s most respected hedge fund managers, that preparation includes a healthy dose of Bitcoin or gold.

Written By Fazal Ul Vahab C H

The post Billionaire Ray Dalio Recommends 15% Allocation in Bitcoin as U.S. Faces Debt Crisis appeared first on Trade Brains.