Ray Dalio Backs Bitcoin as U.S. Debt Risks Mount

Ray Dalio said investors should modestly increase allocations to Bitcoin and gold as non-government credit assets amid rising U.S. government debt risks. According to Sina Finance, the Bridgewater Associates founder warned that recent stress signals in the U.S. Treasury market closely match his sovereign debt crisis model.Dalio said several recent developments in the U.S. Treasury market support the scenario outlined in his book "How Countries Go Broke," including Japan's reduction in U.S. Treasury holdings, long-term Treasury yields rising despite a weaker dollar, and U.S. Treasury Secretary Scott Bessent's announcement that he would increase Treasury buybacks. He said government buybacks of its own bonds usually occur when market demand is weakening, and that Bessent's ability to keep doing so is limited.Dalio estimated that U.S. government revenue this fiscal year is about $5.5 trillion, spending is about $7.5 trillion, and the fiscal deficit is $2 trillion. He said total federal debt, excluding debt held within the government, is close to $32 trillion, and interest expense alone is expected to reach about $1 trillion.He said gold and Bitcoin may benefit over the medium to long term in a weaker-currency environment. Dalio also recommended underweighting bonds, keeping gold at 10% to 15% of a portfolio, and holding a small amount of Bitcoin.