Why does Ray Dalio recommend allocating 15% of assets to Bitcoin (BTC) or gold?

American billionaire and founder of Bridgewater Associates Ray Dalio recently suggested that in the context of a debt-driven crisis leading to increased risks of currency devaluation, investors should allocate about 15% of their investment portfolio to gold or Bitcoin (BTC) as a hedging tool. Although Dalio personally prefers gold, he acknowledges holding a small amount of Bitcoin and affirms its limited supply and global liquidity advantages. This suggestion is significantly higher than the 1-2% he proposed in 2022, highlighting deep concerns about the expansion of U.S. government debt and the impending end of the long-term debt cycle. Crypto investors need to follow the shift in allocation strategies of traditional financial giants towards digital assets.

Dalio Raises Hedging Suggestion: Gold or Bitcoin Should Account for 15%

American billionaire and hedge fund manager Ray Dalio suggests that in an environment where debt-driven crises lead to increased risks of currency devaluation, investors should allocate about 15% of their portfolios to gold or Bitcoin (BTC) as a hedging tool.

Although Dalio emphasizes that he personally prefers gold over Bitcoin, he points out that both assets play a key hedging role in an environment where the value of traditional currencies is eroding.

Gold and Bitcoin: Dual Hedging Assets Recognized by Dalio During a recent guest appearance on the "Master Investor Podcast," the founder of Bridgewater Associates also admitted to holding both gold and Bitcoin simultaneously, but did not disclose the specific amounts.

Speaking of Bitcoin, Dalio added that he holds "some Bitcoins, but not much." He also emphasized that these assets can effectively hedge against the risk of currency depreciation. "If you have a neutral attitude towards all assets, in other words, you have no specific preferences and just want to optimize your portfolio for the best risk-return ratio, then you should invest about 15% of your funds in gold or Bitcoin," he said.

The advantages of Bitcoin coexist with doubts about its status as a reserve currency Furthermore, Dalio pointed out that Bitcoin has certain advantages, such as its limited supply and relatively convenient global transaction capabilities. However, he expressed doubts about whether Bitcoin can become a reserve currency.

His concerns include the transparency of Bitcoin transactions (which could allow government monitoring of activities) and the possibility that the underlying code of Bitcoin could be compromised or tampered with. "I doubt any central bank would consider it as a reserve currency, as everyone can understand and monitor (the transactions). The government can track who is doing what transactions on it. I can't say exactly how it works as a currency, but it is seen by many as an alternative currency," Dalio added.

Debt crisis drives allocation increase, encryption allocation strategy needs adjustment Nevertheless, the recommendation to allocate 15% of the investment portfolio marks a significant shift compared to the previous suggestion in 2022 to allocate only 1-2% to the largest cryptocurrency. This updated recommendation comes at a time when public concern about public debt is intensifying.

According to the latest data from the US debt clock, the scale of the US national debt has reached $37.1 trillion, with a debt-to-GDP ratio of 123.2%. This billionaire also pointed out that the US government's spending is far higher than its income. He emphasized that the government may need to issue nearly $12 trillion in new national debt next year to repay its growing debt.

Dalio emphasizes that we are approaching the end of a long-term debt cycle, during which debt accumulation becomes too burdensome, making it difficult to cope without triggering a crisis. He warns that this scenario is likely to lead to rising interest rates, currency devaluation, and a decline in the stock market, as the market reacts to the continually rising levels of debt and the lack of effective solutions.

Conclusion: Dalio has significantly increased his recommendation for Bitcoin hedging exposure to 15%, which is an important endorsement from the traditional finance sector regarding the defensive value of digital assets in a debt crisis. Although there are still doubts about the feasibility of Bitcoin becoming a reserve currency, the significant change in allocation ratios provides key references for crypto investors. In the macro environment approaching the end of the long-term debt cycle, dynamically adjusting the allocation ratio of gold and Bitcoin may become a core strategy for digital asset portfolios to hedge against the risks of fiat currency depreciation.