The US debt crisis has ballooned to 36.7 trillion dollars! Bridgewater founder Dalio: invest 15% of funds in Bitcoin and gold.

The United States' national debt crisis continues to worsen, now swelling to an astonishing $36.7 trillion. Against this severe fiscal backdrop, Ray Dalio, founder of the world's largest hedge fund Bridgewater Associates, has issued another warning and advised investors to allocate 15% of their funds into hedging assets such as Bitcoin or gold to optimize the "best risk-return ratio." Dalio's remarks not only reflect his deep concerns about the current economic situation but also provide new ideas for investors seeking hedging strategies amid uncertainty.

Dalio's investment advice: 15% allocation to Bitcoin or gold

Dalio suggested that, given the serious debt issues and currency devaluation in the United States, 15% of the portfolio should be allocated to Bitcoin or gold. He stated on the Master Investor podcast: "If you want to optimize your portfolio for the best risk-return ratio, then you should invest about 15% of your funds in gold or Bitcoin."

Dalio stated that he "has some Bitcoin, but not much," and still "strongly favors gold over Bitcoin." However, he emphasized that the specific ratio of Bitcoin to gold "depends on you." Notably, the suggested 15% allocation to Bitcoin is a significant increase from the 1% to 2% he recommended in January 2022, indicating a shift in his view of Bitcoin as an asset allocation tool.

U.S. Debt Crisis: The Roots of Dalio's Concerns

Dalio's remarks were made against the backdrop of the U.S. national debt crisis, which has now ballooned to $36.7 trillion. A report released by the U.S. Treasury on Monday forecasted that due to weakened cash flow and reduced reserves, new borrowing for the third quarter will increase by $1 trillion, which is $453 billion more than previously estimated. The U.S. Treasury also expects to borrow $590 billion in the fourth quarter, which will further exacerbate the government's reliance on debt financing for budget expenditures and heighten concerns about its future fiscal path.

Dalio stated, "The problem is currency depreciation," and pointed out that the U.S. government may need to issue an additional $12 trillion in national debt next year to repay the ever-increasing debt. He noted that other Western countries, including the UK, are also facing the same "debt cycle" problem, and the currencies of these countries will continue to perform worse than hard currencies such as Bitcoin and gold—he referred to the latter as "effective diversification investment tools."

Bitcoin and Gold: "Effective Diversification Investment Tools" in Uncertain Times

Although Dalio advocates using Bitcoin as a tool for portfolio diversification, he remains skeptical about its potential as a reserve currency. He doubts whether any central bank would adopt this cryptocurrency due to the lack of privacy and the transparency of transactions. He stated, "Governments can see who is doing what transactions on it," which means that any potential vulnerabilities in the Bitcoin code could undermine its effectiveness as an alternative currency.

However, Bitcoin and gold have performed strongly in the current economic environment, both reaching new highs in recent months. TradingView data shows that the current trading price of Bitcoin is $118,100, approximately 4% lower than the historical high of $123,230 on July 14, while gold has also reached new highs multiple times over the past few months. The performance of both as "hard currencies" seems to confirm Dalio's assessment of their hedging value.

How should investors respond?

Dalio's advice provides important reference for a wide range of investors in the current complex macroeconomic environment. In the face of expanding national debt, currency depreciation pressure, and global economic uncertainty, allocating a portion of assets to gold and Bitcoin may offer some protection for the investment portfolio.

However, investors should fully consider their own risk tolerance and investment goals when adopting these recommendations. Although Bitcoin has great potential, its volatility is still higher than that of gold. Therefore, the allocation ratio should be adjusted according to individual circumstances. At the same time, continuously monitoring macroeconomic data, government fiscal policies, and the development of the cryptocurrency market will be key to making informed investment decisions.

The United States' $36.7 trillion national debt crisis is forcing investors to rethink their asset allocation strategies. Ray Dalio, founder of Bridgewater Associates, suggests allocating 15% of funds into Bitcoin and gold, providing us with a perspective on how to tackle current challenges. This serves as a warning about the vulnerabilities of the traditional financial system and affirms the potential of Bitcoin and gold as hedging assets. In uncertain times, a diversified allocation, particularly including "hard currency" assets, may help investors find a relatively safe haven in a turbulent market.