Fiat currency devaluation is the real story: Ray Dalio warns that gold has outperformed the US stock market by 47 percentage points, with capital accelerating its escape from the US.

As Bitcoin bulls continue to chase higher prices, Bridgewater founder Ray Dalio has poured cold water on the enthusiasm. His core point directly addresses a market-ignored truth: the biggest investment story of 2025 is not AI or innovation in US stocks, but the ongoing devaluation of fiat currencies. This not only shifts capital flows but also redefines what true returns mean.

The Huge Gap Between Nominal Returns and Real Purchasing Power

While US stocks look promising in 2025, this is just a “visual illusion.” Ray Dalio uses data to expose this illusion.

The Same Return, Different Story

In USD terms, gold returned 65% last year, while the S&P 500 only gained 18%, a 47 percentage point difference. It sounds like gold outperformed, but the real shock comes from the next figure: if priced in gold, the S&P 500 actually declined by 28%.

What does this mean? US stocks appear to be rising, but when measured by real purchasing power, investors’ wealth is actually shrinking. This is exactly what Ray Dalio refers to as the “visual illusion created by currency devaluation.”

The US Dollar Is Systematically Devaluing

The devaluation of the dollar in 2025 is staggering:

The 39% devaluation of the dollar against gold best illustrates the issue. Gold is the second-largest global reserve asset and the only major non-sovereign fiat currency. When the dollar devalues against gold by nearly 40%, it reflects not only a decline in dollar purchasing power but also a shift in global confidence in the dollar.

Capital Is Moving En Masse Into Non-US Assets

Dalio’s warning points to a deeper phenomenon: a systemic change in capital allocation structures.

Non-US Stock Markets Lead Across the Board

Over the past year, non-US stock markets have outperformed the US market overall:

• European stocks lead the US by about 23 percentage points
• Chinese stocks lead the US by about 21 percentage points
• UK stocks lead the US by about 19 percentage points
• Japanese stocks lead the US by about 10 percentage points

This is not just individual market performance but a direct reflection of global capital repricing risk and return. Investors are systematically reducing their concentration in US assets, with capital flowing more rapidly into other markets.

Liquidity Supports Further Capital Shifts

From a crypto market perspective, this macro trend also manifests microcosmically. Circle had minted $2.25 billion USDC by early 2026, and market liquidity remains ample. This abundant liquidity environment facilitates cross-asset and cross-region capital flows.

Implications for Bitcoin

Here’s an interesting paradox: Ray Dalio warns of a US stock bubble and recommends gold and non-US assets, yet his entire reasoning provides macro support for Bitcoin’s inflation hedge narrative.

As fiat currency devaluation becomes the main theme, and investors start measuring real returns in gold rather than USD, the appeal of inflation-resistant assets becomes more evident. Bitcoin bulls are continuing to hold based on this logic. Market rumors suggest analysts expect BTC to surge to $130,000, and behind this optimistic outlook is a judgment that fiat devaluation will persist.

Political Risks Cannot Be Ignored

However, it’s important to note that Dalio also warns of another risk: the 2026 US midterm elections could trigger major political upheaval. If the Republicans lose control of the Senate and House, current pro-crypto policies could be reversed. This poses a potential threat to the entire crypto policy environment.

Summary

Dalio’s core warning is not about dismissing Bitcoin but highlighting a market-ignored truth: currency devaluation is the biggest investment story of 2025. Returns measured in USD may significantly overstate real gains. When measured in gold, US stocks are actually declining. This shift in understanding is changing global capital flows.

For Bitcoin, this presents both opportunities and challenges. The macro backdrop of fiat devaluation supports the case for inflation-resistant assets; the political risks could alter policy environments. In this context, the focus is no longer on “how much it rises,” but on “how much purchasing power is preserved.”