Billionaire Ray Dalio Recommends 15% Bitcoin Allocation as Fiat Currencies Face ‘Classic Devaluation’

Legendary investor Ray Dalio has recommended a 15% portfolio allocation to Bitcoin or gold, warning of an impending “classic devaluation” of fiat currencies similar to those of the 1970s or 1930s, as the United States approaches what he calls the “point of no return” in its debt crisis.

The Bridgewater Associates founder revealed during a Master Investor podcast appearance that the U.S. government spends $7 trillion annually while collecting only $5 trillion in revenue, resulting in a $ 2 trillion deficit that requires $12 trillion in new debt sales over the next year.

Interest payments alone consume $1 trillion annually, accounting for half of the budget deficit.

BILLIONAIRE AND LEGENDARY INVESTOR RAY DALIO JUST RECOMMENDED 15% ALLOCATION TO #BITCOIN

HERE WE GO!!! pic.twitter.com/AZ2gNArGOM

Dalio warned that the debt mechanics have reached unsustainable levels, comparing the situation to “watching an MRI and seeing plaque build up” in a patient’s circulatory system.

The federal debt stands at six times annual revenue, while the government cannot meaningfully reduce spending due to fixed obligations.

The billionaire expressed a strong preference for gold over Bitcoin, noting gold’s status as the second-largest reserve currency globally.

“If you were neutral on everything and optimizing your portfolio for the best return-to-risk ratio, you would have about 15% of your money in gold or Bitcoin,” Dalio stated.

However, he acknowledged Bitcoin’s perceived value as an alternative currency with a limited supply and global transaction benefits, while questioning its effectiveness as a central bank reserve currency due to concerns about privacy.

Dalio’s recommendation comes as Bitcoin trades near $119,000, with technical analysis suggesting the cryptocurrency may be poised for a final rally toward cycle highs between $135,000 and $155,000.

The U.S. dollar has lost over 96% of its purchasing power since the Federal Reserve’s establishment in 1913, with the decline accelerating after President Nixon ended the gold standard in 1971.

The U.S. faces an unprecedented fiscal challenge requiring $12 trillion in debt issuance over the next year, comprising $1 trillion in interest payments, $2 trillion in new borrowing, and $9 trillion in debt rollovers.

Dalio emphasized that similar patterns preceded the decline of previous reserve currencies, including the British pound and Dutch guilder.

The federal government debt has reached 125% of GDP, with a fiscal deficit of 7% of GDP, the highest among industrialized nations.

Dalio proposed a “3% solution,” requiring immediate action to reduce the deficit from 7.5% to 3% of GDP through a combination of tax increases and spending cuts.

The debt doom loop affects capital flows as higher taxation drives wealthy individuals to relocate, creating a vicious cycle.

Approximately 75% of income taxes are paid by the top 10% of earners, meaning losing 5% of this population could eliminate 35% of tax revenue.

Historical precedents include the U.S. successfully reducing its budget deficit by 5% of GDP between 1991 and 1998; however, Dalio expressed skepticism about the political willingness to implement the necessary fiscal discipline.

The mechanics indicate that without corrective action, the debt accumulation will accelerate beyond manageable levels.

Central banks worldwide face similar pressures, leading to coordinated currency debasement rather than competitive devaluations.

All major fiat currencies are expected to decline together relative to hard assets like gold, creating the classic devaluation scenario Dalio describes.

Bitcoin currently trades within a three-year ascending channel, having completed two major legs, with gains of +106% and +197%, respectively.

Technical analysis suggests a potential third leg targeting $155,500 by October, representing a similar mathematical progression within the established channel structure.

The weekly chart indicates that Bitcoin is testing the upper boundary of its long-term ascending channel, located near $119,500.

A breakout above this level could potentially trigger a rapid advancement toward $135,000 within 1-2 weeks.

The 1W MA50 has provided crucial support throughout the advance, with successful retests at the 0.236 Fibonacci level confirming channel integrity.

Notably, M2 money supply expansion has reached $22.02 trillion, creating the fundamental backdrop for Bitcoin’s value proposition as monetary debasement accelerates.

The exponential growth in money supply provides macroeconomic justification for continued Bitcoin appreciation as a hedge against currency devaluation.

MVRV ratio analysis suggests that the current cycle may peak between late August and early September, with the 365-day moving average approaching levels that have historically marked major cycle tops.

The 2021 cycle formed a double-top pattern approximately six months apart, with similar timing patterns emerging in 2025.

The resolution of the U.S.-EU trade deal has improved market sentiment, with Bitcoin recovering toward $119,000 as tariffs were reduced from 30% to 15%.

The Federal Reserve meeting this week could provide an additional catalyst if dovish rhetoric supports a further advancement of risk assets.

Bitcoin appears positioned for a final rally toward $135,000-$155,500 over the next 2-4 months, contingent on breaking above $119,500 resistance.

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