Ray Dalio, the founder of Bridgewater Associates, has predicted that the U.S. dollar could lose its status as the world's reserve currency as early as 2026. This forecast is driven by concerns over the escalating U.S. national debt and its implications for the global monetary system.
In April 2025, Dalio had previously warned about the weakening global monetary system. At that time, the U.S. national debt had already surpassed $36 trillion, with significant interest payments placing a heavy burden on the government. This warning preceded a full market reaction, and since then, various pressures have intensified, including continued increases in U.S. debt and ongoing trade tensions.
Dalio Links U.S. National Debt Stress to Demand for Gold and Cryptocurrencies
In a recent interview with the Financial Times, Dalio addressed concerns about deregulation threatening the dollar's reserve role. He stated that the primary threat stems not from deregulation but from the "bad debt situations" of governments, including the U.S. He believes these debt issues undermine the appeal of their currencies as reserve assets and stores of wealth. Dalio noted that this situation has been a key driver behind the rising prices of gold and cryptocurrencies.
When questioned about stablecoins holding U.S. Treasuries, Dalio expressed that he does not view it as a systemic risk. However, he did highlight a significant concern: "I see a fall in the real purchasing power of Treasuries as being a real risk." He added that stablecoins could avoid broader issues if they are well-regulated.
Dalio also commented on the potential for cryptocurrencies to replace the dollar. He described crypto as an "alternative currency that has its supply limited." He explained that if the supply of dollars increases or its demand decreases, cryptocurrencies become a more attractive option. Dalio pointed to historical precedents, noting that most fiat currencies burdened by substantial debts have struggled to maintain their value as a store of wealth, citing examples from the 1930s, 1940s, 1970s, and 1980s.
Sanctions and Market Stress Deepen Doubts About the Dollar's Reserve Status
Both gold and silver prices have reached record highs amid a weakening U.S. dollar. David Wilson of BNP Paribas discussed the gold rally with Bloomberg, noting that a target of $5,000 per ounce, once considered extreme, is now within reach.
In contrast, Bitcoin has not mirrored this momentum, with traders anticipating further price weakness. Geopolitical tensions are reportedly dampening risk appetite. Nic Puckrin from Coin Bureau suggested that pressure on Bitcoin could persist, stating, "From here, it’s likely we’ll see further downside unless buyers step in." He identified strong support near $88,000 and indicated that concerns related to Greenland might worsen before subsiding.
VanEck has drawn parallels between the current reserve currency debate and earlier financial crises. The firm noted that concerns became prominent after repeated monetary and fiscal interventions during the global financial crisis. These concerns intensified following the U.S. sanctions on Russia's central bank reserves, which prompted a re-evaluation of what constitutes a reserve asset.
VanEck began analyzing this issue in August 2012, following a detailed study of the financial crisis. Initially perceived as a rare event, further analysis revealed deeper structural flaws. The firm referenced the work of Laurence Kotlikoff and reporting by Mark Pittman and Bob Ivry, who successfully sued the Federal Reserve for access to documents.
VanEck highlighted that the Federal Reserve and the Treasury provided backstops to the global financial system in 2008, a similar approach that was repeated during the 2020 lockdowns. This demonstrated that monetary support was no longer a temporary measure.
The imposition of sanctions added a new layer of urgency. The freezing of central bank reserves introduced the risk of total asset loss driven by political considerations. Economists have described such actions as a form of default.
VanEck stated that this situation is contrary to the objectives of reserve managers. The sanctions were imposed by countries with significant financing needs, illustrating the extent to which policymakers are willing to act. This shift has further propelled gold prices upward. For reserve managers, doubts surrounding the dollar's stability are no longer hypothetical.