Billionaire Investor Ray Dalio Makes Special Bitcoin Comments – Both Criticized and Praised
Billionaire investor Ray Dalio issued a stern warning about the possibility of a Fed interest rate cut.
According to Dalio, a rate cut could lead to a depreciation of the dollar and a drop in stock prices.
Speaking during a Reddit Q&A session, Dalio said, “If the Fed cuts interest rates, short-term rates and the dollar will weaken, while long-term rates will rise, steepening the yield curve.” He added that in this situation, stocks could perform poorly, as expected, due to weakening investor confidence and stagflation concerns.
While the possibility of a 0.25 point interest rate cut in September is prominent in the markets, major institutions such as Bank of America are predicting at least two additional rate cuts this year and an expansionary policy that will last until 2026.
Dalio also highlighted long-term economic risks. He noted that the US national debt, which has reached $37 trillion and is equivalent to 124% of GDP, is the highest level since World War II. Dalio, who has previously likened the US debt problem to “plaque accumulating in the veins” and the economy to “a ship heading towards the rocks,” predicted that the country could face a debt-related crisis within the next three years.
Stating that confidence in the dollar and US bonds may weaken due to the increasing budget deficit, rising borrowing costs and financial indiscipline, Dalio wanted 15% of portfolios to be allocated to alternative assets such as gold and Bitcoin.
Dalio made the following statement in his assessment of Bitcoin:
Bitcoin is now an alternative currency with a limited supply. If the supply of dollars increases or demand decreases, cryptocurrencies could become an attractive alternative. However, Bitcoin also has its drawbacks: it can be monitored and potentially controlled by governments, and its programming can be broken by new technologies. Therefore, it is unlikely to become a reserve currency. Gold, on the other hand, has a stronger position thanks to its longer history and its holding as a reserve by governments. That’s why I hold a small amount of Bitcoin but a lot more gold. The most important thing is to have alternative currencies to protect wealth, because most fiat currencies with large debts will lose their value against hard currencies.
*This is not investment advice.