Ray Dalio Warns of Diminished Trust in U.S. Treasuries Amid Political Conflicts

[Block Media Reporter Ham Ji-hyun] Ray Dalio, founder of Bridgewater Associates, one of the world's largest hedge funds, warned that the trust in U.S. Treasuries could weaken as political conflicts intensify following the U.S. midterm elections.

He predicts that the confrontation over government debt issues will increase uncertainty in the financial markets.

On the 10th, Dalio stated on his X account, "The midterm election results will not change the fundamental issues facing the U.S. government," adding, "The most important question is whether political confrontation and government dysfunction will worsen, and I believe both are likely to deteriorate."

He pointed out that issues such as U.S. debt, wealth disparity, and geopolitical conflicts will persist regardless of the election results.

In particular, he forecasted that conflicts surrounding the government budget and debt ceiling could have a direct impact on the financial markets.

Dalio identified the expiration of the temporary budget on December 11, the expected date for reaching the federal debt ceiling in March 2027, and the anticipated depletion of the Treasury's funding methods in the fall of that year as major risk factors.

He anticipates that the risk of a U.S. government default could materialize by next fall.

He explained, "As conflicts surrounding funding issues escalate and investors seek to avoid payment uncertainties, the yields on U.S. short-term Treasuries are likely to rise."

He further warned that as concerns about liquidity and credit risk grow, the trust that U.S. Treasuries have enjoyed as the world's most important safe-haven asset could diminish.

Other institutions have also repeatedly warned about the possibility of the U.S. government reaching its debt ceiling.

Notably, the Congressional Research Service (CRS) reported in September that the current debt ceiling is $41.1 trillion and that it could be reached during the 2027 fiscal year.

Another analysis organization, the Bipartisan Policy Center (BPC), also projected that the debt ceiling would be reached between late winter and mid-summer of 2027, and that it could maintain its payment capacity for about 6 to 9 months through special measures.

https://t.co/yYhHqFBUZn

--- Ray Dalio (@RayDalio) November 9, 2026

Dalio also mentioned the possibility of the U.S. government alleviating its debt burden through currency issuance.

He stated, "The government cannot continue to spend more money than it earns without facing any consequences, just like individuals. However, the government can print money to make debt repayment easier, and in this process, the real value of the debt is diluted."

Regarding financial regulation, he pointed out Senator Elizabeth Warren from the Democratic Party.

He predicted, "If Warren leads the Senate Banking Committee, there is a high likelihood of political conflicts and policy changes that will impact the economy and financial markets."

Senator Warren is a prominent politician advocating for strong regulations on the cryptocurrency industry. The Senate Banking Committee is a key committee that deals with legislation regarding the structure of the cryptocurrency market and regulations on financial institutions.

Will the U.S. Debt Issue Positively Impact Bitcoin's Long-Term Outlook?

In this article, Dalio did not directly mention Bitcoin or digital assets.

However, his warnings about the weakening trust in U.S. Treasuries and currency value dilution could connect to the investment rationale for alternative stores of value such as gold and Bitcoin.

On the other hand, the rising short-term Treasury yields and expanding liquidity risks he warned about could exert short-term downward pressure on risk assets, including Bitcoin.

Dalio emphasized that to resolve the structural issues in the U.S., moderates from both the Democratic and Republican parties need to cooperate. However, considering the current political polarization, he assessed that the likelihood of such cooperation is low.

Meanwhile, Ray Dalio previously analyzed in August that the U.S. debt issue could positively influence Bitcoin.

At that time, he stated, "If demand for U.S. Treasuries weakens, the government may have to bear higher interest rates or the Federal Reserve may need to issue currency to purchase Treasuries. In this process, if the currency value drops, gold and Bitcoin, which are assets not issued by the government, could perform relatively well." He suggested holding 10-15% of the portfolio in gold and incorporating some Bitcoin as well.

André Dregosch, head of European research at Bitwise, expressed a similar opinion. He analyzed, "As political deadlock occurs over the next two years, the extreme confrontation over fiscal issues and the risk of expanding fiscal deficits could increase, making the characteristics of political neutrality and non-state assets receive more attention."

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