Dalio backs Bitcoin, gold as U.S. debt tops $40 trillion

Bitcoin traded near $77,600 on Aug. 21 as Ray Dalio endorsed gold and a small Bitcoin allocation after U.S. debt crossed $40 trillion.

"As general advice, I suggest diversifying well in asset classes and countries that have strong income statements and balance sheets and are not having great internal political and external geopolitical conflicts, underweighting debt assets like bonds, and overweighting gold and a bit of Bitcoin," Dalio said in an X post.

U.S. federal debt reached $40.047 trillion on Aug. 18, up from $39.987 trillion a day earlier, according to the Treasury Department's Debt to the Penny database. Of that total, approximately $32.27 trillion was held by the public and about $7.78 trillion was intragovernmental holdings. The government ended 2025 with $37.64 trillion in federal debt, meaning the total increased by about $2.4 trillion in less than eight months.

Dalio warned the debt situation is approaching an inflection point that could become extremely difficult to manage without severe economic pain. He advised policymakers to address the problem while economic conditions remain relatively strong, because government borrowing requirements typically increase significantly during downturns.

Treasury doubles long-dated buybacks as yields spike

The Treasury announced on Aug. 19 it would increase liquidity-support buybacks for longer-dated nominal government securities. Maximum purchase size will rise from $2 billion to at least $4 billion per operation for securities in the 10-to-20-year and 20-to-30-year maturity sectors, effective Sept. 9 through Nov. 4. The move followed the 30-year Treasury yield reaching its highest level since 2007.

Bitcoin's rally accelerated after the announcement, with BTC breaking above $70,000 after trading as low as $63,000 earlier in the week. When Bitcoin crossed $69,000, exchanges liquidated more than $1 billion in bearish positions within one hour. Spot Bitcoin ETFs attracted about $517 million on Aug. 19 and another $606 million on Aug. 20, per SoSoValue data — more than $1.1 billion in combined net inflows over two sessions. BTC gained about 18% in two days before clearing $76,000, with support at $70,000-$72,000 and resistance near $80,000-$82,000.

Fed rate risk remains as inflation pressures persist

Federal Reserve policy remains a separate risk for Bitcoin. The Fed kept its target rate at 3.5% to 3.75% in July but faced three dissenting votes from officials who preferred a quarter-point increase. Fed Chair Kevin Warsh has emphasized price stability. Polymarket data shows a 55% probability the Fed will hike rates this year. Higher rates could pressure Bitcoin and other risk assets.

The U.S.-Iran war continues to push energy prices higher, keeping inflation elevated. The next Fed decision is scheduled for Sept. 15-16.

Dalio's endorsement strengthens the macro-hedge narrative for Bitcoin as U.S. fiscal concerns intensify. His guidance rests on diversification and reducing dependence on assets tied to highly indebted governments, rather than predicting that BTC will rise whenever debt increases. For U.S. investors, spot Bitcoin ETFs provide regulated exposure through brokerage and retirement accounts, while gold remains accessible through exchange-traded products or physical bullion.

This article is for informational purposes only and does not constitute investment advice.