Ray Dalio, the founder of the world’s largest Hedge fund Bridewater Associateswarns of the global state of the economy. In an interview with CNBC he said that he is not only concerned with a possible recession, but rather because of a potential global system crisis. While the markets are suffering from the current business course, remains Bitcoin stable.
Dalio emphasizes that the current system – both economically and politically – is weakened. He said, “We are in a dangerous phase.” The US state debt is growing explosively, while the budget deficit gets out of control. In his opinion, the congress must reduce the deficit to 3 % of GDP to prevent a disaster.
Meanwhile, the bond markets react violently. The return for 10-year US state bonds has risen to just under 4.5 %, that of the 30-year-old is almost 5 %. These are levels that investors make nervous because there are doubts as to whether the country will be able to operate interest rates on its debts in the future. Dalio believes that the Federal reserve may have to intervene if the unrest continues.
US dollar under pressure
The US dollar also shows weakness. The DXY index, which measures the value of the dollar compared to other currencies, has fallen under 100 for the first time in years. This could indicate a dwindling confidence in the American economy. Dalio therefore calls for better trade agreements with China and a revision of the exchange rate systems.
The uncertainty is additionally reinforced by Donald Trump’s opaque customs policy, the new import tariffs announced and later withdrawn from it. According to Dalio, this unpredictability stirs up fear among investors: “It is a situation like 2008 – or even like 1971 when the USA tasks the gold standard.”
Bitcoin as a stable factor
Bitcoin, on the other hand, is currently showing strength. While many markets are under pressure, Bitcoin has overcome its downward trend in the past few months and is now listing at around $ 85,000. It seems that more and more investors are seeing Bitcoin as an alternative to traditional asset classes.
Ray Dalio was a sharp critic of Cryptocurrencies And Bitcoin later admitted that Bitcoin “can have a place in a diversified portfolio”. And that is exactly what seems to be a reality. In times of uncertainty, investors search for values that are independent of central banks and political promises. The Bitcoin is for a growing number of people.