Bridgewater founder: It’s time to consider replacing the dollar with cryptocurrencies

Billionaire investor Ray Dalio, founder of the world's largest hedge fund Bridgewater Associates, is the latest to warn that ballooning U.S. debt could eventually lead to a devaluation of the dollar as a store of value. As a result, he noted that it's time to consider wider acceptance of alternative currencies such as cryptocurrencies. "We are in a situation where we have too much debt and we are producing debt at a rapid pace," Dalio said in an interview during the World Economic Forum in Davos. "So, yes, we have to think about alternative currencies." "And by the way, this is not just something that individuals are thinking about. Many countries and central banks are also thinking about this. The change to holding bonds and debt as an asset, and buying gold and other assets in the portfolio is a reality," he added.

Over the past year, bitcoin prices have risen 165%, climbing to more than $100,000 per coin after Trump won the U.S. election in November last year. It is widely expected that the new administration will be more friendly to the cryptocurrency community. Trump and his wife Melania even released their own emoji tokens.

Not only that, Trump also signed an executive order on Thursday to establish a cryptocurrency task force to propose new digital asset regulations and explore the possibility of establishing a national cryptocurrency reserve, fulfilling his promise to quickly reform U.S. crypto policy.

It is reported that the task force will be led by David Sacks, Trump's appointed artificial intelligence (AI) and cryptocurrency commissioner. The task force also includes the heads of government departments and regulators such as the U.S. Treasury Secretary, Attorney General, Commerce Secretary, Chairman of the U.S. Securities and Exchange Commission (SEC), Chairman of the Commodity Futures Trading Commission (CFTC) or their designated personnel.

Dalio is not the only one who believes that the era of dollar hegemony is coming to an end. Morgan Stanley pointed out in its latest report that despite the dominance of the US dollar sweeping the entire market, there are far more traders seeking to sell the world's reserve currency than people think. The bank recommends shorting the US dollar against the euro, yen and pound because it is expected to weaken.

"While there are many people who are bullish on the US dollar and may be the most outspoken in expressing their views, there seem to be more "silent" investors who are willing to sell the US dollar. Many people have prepared funds and are just waiting for a short signal." The bank's analysts wrote.

However, the reasons given by Morgan Stanley are different from those of Dalio: inflation data before March may increase the possibility of the Federal Reserve cutting interest rates, and the protracted fiscal negotiations in Congress may disappoint dollar bulls. The report said that strategists expect a more moderate outcome in trade policy, which may also put pressure on the US dollar.

And Dalio is more warning about the growing debt problem in the United States. He noted that the worst-case scenario for U.S. debt, such as a massive outbreak of inflation, has not yet occurred. And the Trump administration's extension of its signature tax cuts could increase debt levels.

In addition, Dalio also believes that the 10-year U.S. Treasury yield, which is currently hovering around 5%, is just the beginning of its rise, which could put pressure on U.S. stocks and support more funds to turn to areas such as cryptocurrencies.

"Perhaps the biggest threat, certainly one of the biggest threats, is the supply and demand of bonds related to U.S. Treasuries," he added.