‘Nothing Stops This Train'—Fed Dollar Crisis Predicted To Trigger ‘Critical' Bitcoin Price Shock
Bitcoin and crypto prices have soared this year, with the combined crypto market topping $4 trillion amid a Satoshi Nakamoto-era bombshell.
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The bitcoin price, up almost double from this time last year, hit an all-time high of $123,000 per bitcoin earlier this month and is braced for an Elon Musk shock after his rocket company SpaceX set alarm bells ringing.
Now, as traders bet on a new 'infinite money glitch," legendary billionaire Ray Dalio has recommended a 15% bitcoin or gold portfolio allocation, warning the Federal Reserve has been caught up in debt 'doom loop" and that the dollar is past the 'point of no return.'
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'We are at the at the point of no return because we'll be having more debt,' Dalio, the founder of the world's largest hedge fund Bridgewater Associates, said on The Master Investor Podcast and calling the situation in the U.S., the U.K. and other countries a 'doom loop.'
"How do you pay all this debt and all this debt service plus everything else? The only way to do that is for the government to create debt and borrow that money to pay and the central bank printing the money."
U.S. debt has skyrocketed in recent years following huge government spending through Covid-era lockdowns, with interest rates that were rapidly hiked to rein in inflation adding to the cost of servicing the ballooning $37 trillion U.S. debt pile.
07/30 update: The Federal Reserve has left interest rates on hold, as the market had expected it would do, though governor Christopher Waller and Fed vice chair for supervision Michelle Bowman voted for a cut, the largest number of dissenting votes by Fed officials in just over three decades.
'If we cut rates too soon, maybe we didn't finish the job with inflation. History is dotted with examples of that,' Fed chair Jerome Powell said during a press conference. 'If you cut too late, then maybe you're doing unnecessary damage to the labor market.'
Earlier, data showed the U.S. economy grew at a stronger-than-expected pace in the second quarter as a growing trade balance and renewed consumer optimism propelled GDP to 3% for the three months from April through to the end of June.
The bitcoin price and wider crypto market have climbed following the Fed's interest rate decision, with one crypto company executive dismissing interest rate-led market swings as noise.
'Institutions are in a race, for some it's existential, for relevance in the next-gen financial internet,' Johnny Garcia, managing director of institutional growth and capital markets at VeChain, said in emailed comments, adding the "chatter and excitement around the direction of Fed rates is centrally focused on looking for buoy to send crypto prices higher–not about fundamental adoption.'
Bitcoin and cryptocurrencies have exploded onto Wall Street and into company's treasuries in recent years, with companies led by Michael Saylor's Strategy and bitcoin exchange-traded funds (ETFs) sucking up around 2.5 million of the 21 million bitcoin that will ever exist.
'Nothing is stopping this train; least of all short-term one-off market-based factors such as the U.S. Federal funds rate," Garcia said. "When markets take into consideration the effect of central bank lending rates, it's through the following perspective lens: current state and the direction of financial conditions and secondly expected economic activity as a result.'
Tesla billionaire Elon Musk hit the campaign trail for U.S. president Donald Trump last year, issuing doomsday warnings over the spiraling U.S. debt pile and this year falling out with Trump over his failure to rein in spending.
Musk called the dollar 'hopeless" earlier this month, posting to his social media platform X that his new America Party would use bitcoin over so-called fiat currency.
Dalio went on to advise investors to allocate at least 15% of their portfolios to gold or bitcoin, going far beyond the 2% bitcoin allocation recommended by BlackRock, which has found phenomenal success with its $85 billion spot bitcoin exchange-traded fund (ETF).
'[If] you were optimizing your portfolio for the best return-to-risk ratio, you would have about 15% of your money in gold or bitcoin,' Dalio said, with his comments cheered by those in the bitcoin and crypto world.
'The man has a point,' the X account of crypto asset manager Bitwise posted alongside a chart of U.S. debt shown soaring to around $35 trillion.
'Dalio is merely suggesting putting a small portion of your deposit into time-tested assets, just like major funds do,' Arthur Azizov, founder of B2 Ventures, said in emailed comments.
'15% of a portfolio is a rather small share—after all, the remaining 85% can be invested however you like. Both gold and bitcoin are considered safe-haven assets in times of high inflation. Gold needs no introduction as it's a historically protected asset. And bitcoin is often referred to as 'digital gold,' especially given the way regulation is evolving and how banks and governments plan to use it."
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Meanwhile, bitcoin price and crypto analysts are predicting this is "critical" time for the market as investors increasingly pour cash into crypto exchange-traded funds (ETFs).
'Bitcoin could quickly reclaim $120,000 and push into price discovery,' Matt Mena, crypto research strategist at 21Shares, said in emailed comments.
"The timing is critical. Spot bitcoin ETFs, and now ethereum ETFs, which have seen over $5 billion in flows in the past month and outpaced bitcoin on several days, continue to absorb institutional demand. With regulatory clarity taking shape and a coordinated federal stance now emerging, institutional adoption may accelerate meaningfully.'
Mena added he believes the bitcoin price could soar be catapulted as high as $150,000 per bitcoin within the next couple of months if the Trump administration makes a 'strong declaration around the strategic bitcoin reserve' Trump ordered the creation of in March.
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