Ray Dalio’s Bitcoin and Gold Investment Recommendation

Bridgewater Associates founder Ray Dalio is advising investors to allocate 15% of their portfolios to Bitcoin or gold. He cites rising risks due to the U.S.’s mounting debt and potential currency devaluation.

> “If you were optimizing your portfolio for the best return-to-risk ratio, you would have about 15% of your money in gold or Bitcoin,” Dalio mentioned during the Master Investor podcast on Sunday.

This recommendation marks a significant change from his earlier suggestion of only 1-2% in Bitcoin in 2022. Dalio is increasingly worried about a “debt doom loop,” referencing an expected $12 trillion in new Treasury issuance to manage the national debt of $36.7 trillion.

A report from the U.S. Treasury disclosed that the government plans to borrow $1 trillion in Q3, with an increase of $453 billion from earlier estimates, followed by $590 billion in Q4.

Dalio, who prefers gold over Bitcoin, described both assets as “effective diversifiers” in situations where fiat currencies lose value against hard assets. However, he remains skeptical about Bitcoin’s effectiveness as a reserve currency, citing concerns over transaction transparency and potential vulnerabilities in the blockchain.

> “Governments can see who is doing what transactions on it,” he stated, emphasizing that any weaknesses in the code could damage Bitcoin’s reputation as an alternative currency.

Although Dalio owns “some Bitcoin,” he views the 15% recommendation flexibly, allowing investors to decide the specific ratio of Bitcoin to gold. Bitcoin currently trades just over $118,000 during Asian morning hours on Tuesday.