Ray Dalio, the billionaire founder of Bridgewater, warns that the world currency order is "on the verge of collapse".
He points to the current administration's tariff policies as the main cause, arguing that this has promoted de-globalization trends and caused severe trade imbalances.
Ray Dalio's Warning: Challenges to US Economic Supremacy
Earlier this month, President Donald Trump introduced reciprocal tariffs on all imported goods, imposing at least a 10% tariff on all countries. A 90-day grace period followed, but the situation with China worsened. Trump raised tariffs on Chinese products.
Tariffs on most US imports from China rose to 145%. In retaliation, Beijing imposed a 125% tariff on US products. There were reports that tensions could ease, but nothing has been confirmed yet.
In his latest essay, Dalio explores these dynamics in more depth, arguing that even if negotiations ease tensions, the damage already done cannot be fully reversed.
"Some believe that the tariff chaos will calm down with more negotiations and more thought given to how to structure it to work reasonably. However, I am now hearing from many of those who need to deal with this issue that it is already too late." – Ray Dalio, wrote.
Dalio emphasized that exporters and importers worldwide must significantly reduce their dealings with the US. He mentioned that producers and investors in the US and China are actively seeking alternatives to minimize interdependence.
He believes this trend is widely recognized across trade, capital markets, geopolitical, and military relationships. Dalio argued that the world is approaching the collapse of monetary, domestic political, and international order due to unsustainable fundamentals. This situation is similar to historical global order changes.
"Not yet fully realized, but increasingly recognized that the US role as the world's largest consumer of manufactured goods and the largest producer of debt assets to finance overconsumption is unsustainable. Therefore, it is naive to assume that selling to and lending to the US and being repaid in dollars that have not depreciated for holding US debt. Another plan is needed." – Ray Dalio.
The billionaire investor worried that other countries might risk bypassing the US while adapting to this separation. New trade networks and economic "synapses" are excluding the US. These changes could further weaken trust in the US dollar, which is already losing ground amid global economic uncertainty.
While he did not specify which currency might stand out, Dalio has previously supported "hard money" assets like Bitcoin (BTC) and gold.
"I want to move away from debt assets like bonds and debt and hold hard money like gold and Bitcoin." – Ray Dalio, speaking at Abu Dhabi Financial Week (ADFW) in December 2024 statement.
Global Monetary System Crisis... Bitcoin Solution?
This warning has caused a significant stir in the cryptocurrency community. Jeff Park, Alpha Strategy Head at Bitwise, said Dalio's recent statements suggest the "de-dollarization" threat is imminent.
Park emphasized that Dalio's shift from supporting China to acknowledging US economic imbalances indicates the world is moving away from the US dollar faster than many expect. This is a concept long recognized by Bitcoin supporters.
"The de-dollarization threat is closer than you and I know." – Jeff Park, wrote.
Similarly, another expert argued that the conditions Dalio described create an ideal environment for Bitcoin. Rex believes these developments could significantly raise Bitcoin within the next 18 months, potentially exceeding market expectations.
The impact is already quite visible. BTC's value has recovered amid dollar decline. It rose 7.5% last week. At the time of writing, BTC was trading at $94,985.
In fact, market observers are increasingly optimistic about BTC. They are predicting higher price targets for the largest cryptocurrency. Last week, ARK Invest adjusted its BTC price prediction from $1.5 million to $2.4 million by 2030. Meanwhile, experts' BTC predictions range from $150,000 per coin to an optimistic projection of $1 million by the end of 2025.
